Representation and Warranties
Many NDAs that I have seen have clauses saying that the seller is not making any representations or warranties as to the accuracy or completeness of the provided information.
Understand that there's always a possibility of innocent errors or overly optimistic projections - however, how does the buyer ensure that the received information is at least reasonably accurate / not fraudulent? i.e. when the seller says you are buying corporation A that has this much land and this much equipment and this much sales last year, would you be able to sue them if those turn out to be wildly untrue?
Does, for example, the final purchase agreement spell out exactly the items that the seller is swearing representation to - e.g. audited statements, inventory counts etc. ?
Does, for example, the final purchase agreement spell out exactly the items that the seller is swearing representation to - e.g. audited statements, inventory counts etc. ?
The final APA will have a large section on reps & warranties spelling out exactly what can be clawed back. The mechanism for doing so depends on the structure of the deal. Sometimes a certain amount of cash is withheld in an escrow account or it's just subtracted from a seller's note/earnout etc...
If there is something like what you described pre-APA then you'd see it in the LOI rather than NDA but it's not something you can really pursue legal action over meaningfully/sensibly from a time/cash perspective.
FWIW - that's LMM. Probably different for chunkier deals.
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