Representations and Warranties in Mergers and Acquisitions (M&A)

#mergersandacquisitions #corporatelaw #business
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Representations and warranties (or reps & warranties) come up often in the world of mergers and acquisitions. Whether you’re the seller or the buyer of a business, reps and warranties make up a significant portion of the final purchase agreement.

“What are representations and warranties? Why are they so important?” you ask. Well, dear viewer, put simply, they are statements about the state of the business that serve as the basis for indemnification and an allocation of risk between the buyer and the seller.

That’s the explanation put simply. If you want to know more (and you should), watch the video where I make six main points about the role of representations and warranties from my perspective as a corporate lawyer.

Here’s a quick rundown in case you want to jump ahead:
0:51 – Representations and warranties are statements about a business
2:00 – Reps and warranties as basis for indemnification
4:36 – Why reps and warranties are important when buying a business
5:39 – Representations and warranties aren’t always facts
6:58 – Reps and warranties as allocations of risk
7:34 – They are almost always joint and several
10:21 – The two main qualifiers: knowledge & materiality

So, take a look and leave any questions in the comments below. As always, feel free to contact me directly as this is what I do and I’m happy to help if I can.
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For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com

Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.

You can also reach me at:

https://www.linkedin.com/in/brettcenkus

http://www.cenkuslaw.com

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About me:

My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.

The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders’ agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.

From 2010-2013 I served as Chief Legal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built Paragon Residential Mortgage. Paragon was sold to Bridge Investments in 2006.

I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.

Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

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