What are the most important terms of an M&A agreement?

The most important terms of an M&A agreement are:

  • Purchase price: how much the target is being purchased for
  • Payment terms: timing, type of consideration, and method of payment
  • Closing conditions: regulatory approvals or shareholder approval
  • Representations and warranties: statements made by the seller about the condition of the business being sold, including its financial performance, assets, liabilities, and legal compliance
  • Indemnification: The obligation of one party to compensate the other for losses arising from breaches of representations and warranties or other agreed-upon obligations
  • Non-compete and non-solicitation agreements: seller agrees not to compete with the buyer or solicit its employees or customers for a specified period after the transaction is completed
  • Employee retention: Terms relating to the retention of key employees of the target company after the acquisition, such as retention bonuses or employment agreements
  • Governing law and jurisdiction: the law and jurisdiction that will govern the agreement and any disputes