M&A Agreements: Structuring Financial Accounting Provisions

Description

Financial accounting provisions in acquisition agreements are key when drafting financial representations. The accounting provisions in the agreement should reflect the valuation method used and incorporate specifics from financial statements and other business reports.

Counsel must be able to navigate both the general financial statements representation, as well as supplemental representations that might relate to topics such as off-balance sheet liabilities and valuation drivers. For instance, counsel should understand whether or how negotiated “add-backs” that were included in valuation assumptions would be covered by the representations in the acquisition agreement.

Often, the GAAP financial statements that are referenced in the general representation are not specific to cover valuation drivers important to the parties. Counsel for buyer and seller must learn to work with financial and accounting professionals to ensure that the definitive agreements conform to the expectations of the parties.

Listen as our authoritative panel explains the key accounting provisions that must be addressed in acquisition agreements, and provides strategies for structuring financial accounting terms in a way that benefits and protects both buyers and sellers.