Representations and Warranties in Mergers and Acquisitions: What Business Owners Really Need to Know
In mergers and acquisitions (“M&A”), the primary transaction agreement typically includes representations and warranties (or “reps and warranties” or just “reps”) from each party to the other. These statements address various aspects of a party’s status, business, assets, liabilities, properties, condition, operating results and future prospects. Representations and warranties often span 15 to 30 pages within the transaction agreement and may extend further when referencing definitions. Drafting and negotiating these terms is a significant part of any M&A deal.