Regardless of the structure of an M&A transaction, all purchase and sale agreements have two very important sections that are heavily negotiated: Reps and Warranties and Indemnification. It is essential for potential sellers to understand the reps and warranties they will be asked to make so they are not surprised or unprepared when they get a draft of a purchase and sale agreement.

Representations and Warranties

The buyer and seller make reps and warranties to each other in the purchase and sale agreement. The seller's reps and warranties typically make up the largest part of the purchase agreement. These reps and warranties serve two important purposes.

At MidCap Advisors we advise clients on the "transaction continuum" ranging from licensing, which represents a relateively low level of commitment by both parties, to the purchase or acquisition of a company, which represents the highest level of commitment. 

The following is an exerpt from an excellent article on the pros and cons of licensing by attorney Bill Venema, a partner with the law firm of Epstein Becker & Green. This article describes the pros and cons of licensing from both sides of the table.

With the rebound in the economy and the increase in business valuations, MidCap Advisors has seen a significant increase in activity.  Below is a list of some of the projects on which MidCap Advisors is working.

MidCap's business valuation services group helped three former senior executives of a nationally recognized casual dining restaurant chain win a sweeping victory in their litigation against the buyer that acquired their company.  The dispute centered around the amount of money MidCap's clients were entitled to receive as part of a change-in-control agreement that was in place when the buyer acquired the casual dining operator.

MidCap Advisors has been retained by The Keyword Group, a prominent Italian company, to identify and negotiate one or more strategic acquisitions for them in the United States over the next twelve months.  The Keyword Group is representative of many strategic buyers, both domestic and international, who view the current market disruption as an opportunity to build market share through acquisition and generate superior returns. 

Stainless Tubular Products (STP), a leading metal service center in the U.S. specializing in welded stainless steel tubing, pipe, fittings and bar, was acquired by TW Metals, Inc.