4b. Deal Room (Seller)
Typically, companies are bought and sold through an auction process lead by an investment banker, but occasionally, buyers and sellers find each other without a third party. In any case, interested buyers will request certain company information (such as financial statements, tax returns, material contracts, insurance, benefits, etc.). We call this “diligence”. If you are selling your company, Stock Legal will help you assemble that diligence into a virtual deal room for ease of document review and transmission. If you are buying a company, we will provide you with a list of diligence items that you should request, and help you review the information in the deal room.
5. Transaction Documents
Customarily, buyer’s attorney drafts the transaction documents. If we represent the Seller, then we review those transaction documents and work with you and your investment banker to negotiate the representations, warranties, rights, and obligations that are in your best interest. Our first step in this process, whether we represent the buyer or seller, is educating you on the legalese in those transaction documents. The next step is that we make recommendations. Because you are educated in the process, you will then be empowered with information and our recommendations to make informed business decisions on how you want to proceed on the various issues.
Often, deals are a “sign and close," which means that while the buyer is doing their “due diligence” through Step 4, we are negotiating the transaction documents referenced. Because all of this occurs simultaneously, we often sign the transaction documents on the date that we close the deal (and the buyer is paid the purchase price).
Often, there are miscellaneous items that we will assist with post-closing, such as true ups, working capital adjustments, earnouts, etc.