Business transactions

Early review of a letter of intent identifies what is being purchased, which obligations will transfer and the conditions to be satisfied before closing.

Diligence includes review of ownership records, significant contracts, leases, loan documents and approvals. An asset transaction and an equity transaction raise different questions about liabilities and contractual restrictions.

A purchase agreement records the assets or interests transferred, price and payment terms, representations, covenants, conditions and allocation of specified risks. Particular attention is needed where part of the price is deferred or the parties have continuing obligations.

Related work includes transfer documents, company approvals and closing checklists, with responsibility assigned for information, documents, consents and closing conditions.

Existing loan covenants, guarantees, lease-assignment provisions and change-of-control restrictions affect whether and how the transaction proceeds. These documents are reviewed early enough to identify lender, landlord or counterparty involvement.

Related financing review addresses covenants, guarantees and required consents for the business as borrower.