Devil in the Detail

Complex legal agreements are an unavoidable commercial necessity.  With each one, the devil is in the detail. 

“A clear understanding of key terms and the on both sides is mandatory”

A misunderstood clause or a complex methodology which could be construed as ambiguous can be the downfall of a deal or significantly impact shareholder value.

Some pointers to ensure a successful contractual process:

• The structure of the deal needs to be clearly set out up-front. In particular, the price.
• Make sure the components of the purchase price are clear, achievable (by the other party) and easy to calculate when a second or subsequent tranche is payable.
• Make sure any working capital/net tangible asset formulas and methodology are clearly understood and defined.
• Ensure any obstacles which are deal breakers are identified up front and clearly discussed with the other party to avoid a waste of time and money with the deal falling over later.
• If the sale model is complex, ensure the relative clauses and terms are notated and understood by all parties.
• Make sure representations and warranties for a seller are reasonable, practical and not cumbersome ensuring reasonable peace of mind upon deal closure.

The views expressed in this article are the views of the author. This article provides general information, does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information.