Haynes and Boone's Newsroom
A Closer Look at Stock Purchase Agreements
12/1/2001
Arthur M. Nathan
Excerpt
1.1. Buyer’s Perspective
Buyer wants to pay a reasonable price for a clean company. Buyer wants comprehensive and unqualified representations and warranties from Sellers to assure Buyer that it is getting what it believes it has bargained for. The risks of the unknown should be borne by Sellers; any undisclosed problem that somehow relates to the pre-closing period—that somehow can be linked to anything that transpired on Sellers’ watch—should be Sellers’ problem.
1.2. Sellers’ Perspective
Sellers’ believe they are selling an ongoing business and that all businesses have a normal level of problems. They believe Buyer is buying this business “warts and all.” Sellers are willing to protect Buyer against anything truly extraordinary, and against their outright fraud, but that’s it.