Business Purchase Agreement Terms

Just what is the norm when it comes to terms in a Business Purchase Agreement?

As you may be aware, McGuire, Wood & Bissette, P.A. handles many business purchase agreements for our clients.  It is our endeavor to provide the client with the most favorable  purchase agreement possible, while taking into consideration the bounds of reasonableness as to the terms of the purchase or sale (as the case may be).  In many instances it is difficult to determine what is, or is not, reasonable under any given set of circumstances. 

Recently, the Business Law Section of the North Carolina Bar Association, through  its listserve, sent out a link to a Purchase Agreement Study, conducted by Houlihan Lackey.  Houlihan Lackey is an international investment bank that provides a wide range of advisory services in the areas of mergers and acquisitions.  They say that their work comes in all shapes and sizes, but that this study summarizes selected terms of middle market transactions.  The terms selected are indemnification provisions with respect to representations, warranties and covenants.  Recognizing that there really is no agreed upon definition of what is “fair and normal” or a “market” provision, the study presents the patterns of provisions within transactions, and sets benchmarks for consideration  by transactional parties and their legal counsel. 

To follow is the link to the 2008 study, however please realize that  I have no comment or opinion as to the validity of the information contained therein, and I cannot tell you how long this link will actually work, as it is outside of my control.  I hope you enjoy review of the information contained in the study.  I found it very interesting, and believe it will be useful in considering my own approach to drafting what I hope are fair and reasonable terms for my business clients.


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Tom Grella