Knowledge Qualifiers In M&A Transactions

"My mama always said life was like a box of chocolates. You never know what you're gonna get." goes a dialogue in Forrest Gump.

This holds true in all cases. It is however natural to expect that there are less surprises, i.e. the not so pleasant ones, and see what can be done to try and avoid the not so pleasant surprises.

Hence in most contracts including acquisition transactions one of the key provisions is representations and warranties provided to the buyer by the seller. The buyer is typically cautious as any liability would ordinarily attach to the buyer or the subject matter of acquisition.

Whether the transaction is one of an asset purchase, business purchase or shares of a company, the buyer would expect that the seller provide a confirmation that 'all is well', and that no liabilities would arise in the future. Liabilities could be of several kinds, i.e. statutory liabilities including tax liabilities, employment related liabilities, asset