Disclosure In The Context Of Private M&A Transactions

In which context is "disclosure" relevant in private m&a transactions?

Disclosure is a key element of private m&a transactions. It is primarily used in the context of representations and warranties as well as for procedural / structural aspects.

How is disclosure relevant for representations and warranties for a buyer?

The buyer makes an investment decision based on its knowledge of the target business, which is derived mainly from information about the target business disclosed by the seller (disclosed information). A prudent buyer will want to assure the assumptions underlying its investment decision (investment assumptions) via representations and warranties. Disclosed information is therefore used to determine the scope of the representations and warranties (eg if a target business utilises a key supplier, the buyer will want protection via representations and warranties that the supply agreement with that key supplier is valid and has not been terminated).