Deal Issues Negotiating Tool
Acquisition Terms / Background/Detail / Comments/NotesStructure of Acquisition / □ Asset ☐ Stock ☐ Merger ☐ Other
Economics
Purchase Price / Cash: $[•]
Equity: [Describe] Promissory Note: $[•] Terms of Note: [Describe]
Earnout/Contingent Payment: [Describe]
Escrow/Holdback / □ None ☐ Escrow ☐ Holdback
Amount: $[•]
Escrow/Holdback can be accessed for the following claims:
□ Indemnification; ☐ Closing Adjustment; ☐ Other: [Describe]
Purchase Price Adjustment / Method of adjustment: ☐ None ☐ Working capital
□ Shareholders’ equity ☐ Other: [Describe]
Threshold for adjustment: $[•]
Tax related items: ☐ Included ☐ Excluded
Will there be an estimated adjustment at Closing? ☐ Yes ☐ No
Who will prepare the estimated adjustment at Closing? ☐ Seller ☐ Buyer Who will prepare the estimated adjustment post-Closing? ☐ Seller ☐ Buyer
Accounting standard applied: ☐ GAAP ☐ Past practices consistent with GAAP Applied by Seller ☐ Other: [Describe] / See MSPA, Vol. I, Sections 2.5 and 2.6 and accompanying commentary.
Indemnification/Remedies / See MSPA, Vol. I, Section 11 and accompanying commentary.
Cap(s) / Amount(s): $[•]
Coverage and carve outs: [Describe]
Acquisition Terms / Background/Detail / Comments/Notes
Basket(s) / Amount(s): $[•]
Type: ☐ Deductible ☐ Tipping ☐ Other: [Describe] Coverage and Carve Outs: [Describe]
Mini-Basket Amount(s): $[•]
Coverage and Carve Outs: [Describe]
Materiality Scrape / Include materiality scrape? ☐ Yes ☐ No
Materiality scrape applies to: ☐ right to indemnification ☐ calculation of damages / See MSPA, Vol. I, Section 11.2(a)(i) and accompanying commentary.
Buyer’s Indemnification
Limitations/Reductions / Indemnification payment reduced for: ☐ tax benefits
□ insurance proceeds ☐ Other [Describe]
Include: ☐ Express Obligation of Buyer to Mitigate Losses
Include: ☐ Benefit of the bargain provision; ☐ Anti-sandbagging provision;
□ Buyer non-reliance provision / See MSPA, Vol. I, Section 11.1 and the accompanying commentary for a discussion of pro- and anti- sandbagging provisions.
Definition of “Damages” / Exclusions: ☐ No ☐ Yes
If “Yes,” are punitive damages excluded? ☐ No ☐ Yes, or ☐ Yes, but exception for punitive damages payable to third parties
If “Yes,” are incidental or consequential damage excluded? ☐ Yes [Describe] ☐ No / See MSPA, Vol. I, Section 11 and the opening commentary to such section.
Indemnification Claim Offsets other
than Escrow/Holdback / □ None ☐ Promissory note ☐ Earnout ☐ Other: [Describe] / See MSPA, Vol. I, Section 11.7 and accompanying commentary.
Indemnification as the
Exclusive Remedy / □ Yes ☐ No
Carve outs to exclusivity: ☐ Fraud; ☐ Intentional misrepresentation; ☐ Other: [Describe]
Specific Performance / □ Yes ☐ No
Limits: [Describe]
Acquisition Terms / Background/Detail / Comments/Notes
Survival Period(s) Representations:
Representation / Months / Statute of Limitations / Indefinite
Broker’s/finder’s fees / ☐ / ☐ + days / ☐
Capitalization/ Ownership / ☐ / ☐ + days / ☐
Due authority / ☐ / ☐ + days / ☐
No conflicts / ☐ / ☐ + days / ☐
Material contracts / ☐ / ☐ + days / ☐
Financial statements / ☐ / ☐ + days / ☐
Undisclosed liabilities / ☐ / ☐ + days / ☐
Title to/sufficiency of assets / ☐ / ☐ + days / ☐
Employee benefits/ERISA / ☐ / ☐ + days / ☐
Environmental / ☐ / ☐ + days / ☐
Intellectual property / ☐ / ☐ + days / ☐
Taxes / ☐ / ☐ + days / ☐
Other / ☐ / ☐ + days / ☐
Survival Period Covenant(s) / □ Until performed ☐ Other [Describe]
Representations and Warranties / See MSPA, Vol. I, Section 3 and accompanying commentary.
Undisclosed Liabilities / □ None ☐ Limited to “material” liabilities ☐ Limited to GAAP liabilities
□ Other: [Describe] / See MSPA, Vol. I, Section 3.9 and accompanying commentary.
Full Disclosure Representation and Warranty / □ None ☐ 10b-5 ☐ Other: [Describe]
Bring-down/Accuracy of Representations and Warranties Required to Close / □ Representations and warranties must be true and correct in all material respects
□ No failure of condition unless the breach results in a MAE ☐ Include double materiality scrape
Carve Outs: [Describe] / See MSPA, Vol. I, Section 8.3 and accompanying commentary.
Acquisition Terms / Background/Detail / Comments/Notes
Compliance with Law / □ Past and Present ☐ Only Current
Knowledge Qualified: ☐ Yes ☐ No
Pre-Closing Covenants
Deal Protection / □ No shop ☐ No talk; ☐ Go shop ☐ Force the vote
Fiduciary Duty Out in the Event of Deal Protection / □ None ☐ Limited to [Describe] ☐ Full fiduciary out
Regulatory Approvals / □ None ☐ Full “Hell-or-High-Water “ ☐ Other [Describe]
Updating Disclosure Schedules / □ Updates to the Disclosure Schedules will be ignored for the purposes of:
□ closing conditions and ☐ post-closing liability.
□ Seller is permitted to update Disclosure Schedules, which updates will: [Describe]
Closing Conditions
Absence of Appraisal Rights / □ Total Absence Required ☐ Permitted Percentage: %
□ Not Addressed or Applicable
Absence of Legal Proceedings / □ Absence of legal challenge pending or threatened
□ Absence of legal prohibition ☐ Other [Describe]
No Material Adverse Effect / □ None ☐ Explicit ☐ Back door (through bringdown) / See MSPA, Vol. I, Section 1.1, definition of “Material Adverse Change” and Section 3.12 and accompanying commentary.
Financing/Funding / □ None ☐ Debt financing; ☐ Funding of debt commitments
□ Other [Describe]
Legal Opinion / □ None ☐ Yes, limited to [Describe]
Financing Terms
Financing Required / □ Yes [Describe] ☐ No
Consequence of Financing Failure / □ Walk away right ☐ Reverse break fee [Describe Amount, etc.] ☐ Breach of contract
□ Right of buyer to arrange financing
Acquisition Terms / Background/Detail / Comments/Notes
Buyer Duty to Arrange Financing / □ Best efforts with duty to sue banks ☐ Reasonable efforts no duty to sue banks ☐
Other [Describe]
Seller/Target Covenant to Cooperate / □ None ☐ Yes [Describe]
Termination / See MSPA, Vol. I, Section 10 and accompanying commentary.
End Date (a/k/a “Drop Dead” Date) / Will there be an End Date? ☐ No ☐ Yes: [Describe]
If so, who can terminate the agreement on or after the End Date? ☐ Buyer ☐ Seller Ability to terminate restricted to non-breaching party: ☐ Yes ☐ No
Special Termination Rights/Break Up Fee / Prior to the End Date, ☐ Buyer ☐ Seller will have the following special termination rights: [Describe]
Include Break Up Fee: ☐ Yes $[Amount] ☐ No
Key Defined Terms
Material Adverse Effect / Include specific dollar threshold? ☐ No ☐ Yes: Amount $[•]
Prospects of the Business: ☐ Included ☐ Excluded ☐ Excluded but forward looking (e.g., “would be reasonably likely to have a MAE”)
Carve outs from MAE: [Describe] / See MSPA, Vol. I, Section 1.1, definition of “Material Adverse Change” and accompanying commentary.
Knowledge / □ Limited to actual knowledge or ☐ Includes constructive knowledge: [Describe] Knowledge of whom? ☐ General ☐ Specified individuals or titles: [Describe] Level of inquiry: ☐ No duty of inquiry ☐ limited duty ☐ full duty: [Describe] / See MSPA, Vol. I definition of “Knowledge” and accompanying commentary.
Miscellaneous Items
Governing Law / [Describe]
Waiver of Jury Trial / □ Yes ☐ No
ADR/Arbitration / □ Yes [Describe] ☐ No
Party to Prepare First Draft Purchase Agreement / □ Buyer’s counsel ☐ Seller’s counsel
Targets Retention of Attorney- client Privilege in the Regard to
Communication’s with Deal Counsel. / □ No ☐ Yes [Describe Extend]