M&A Nugget: SUPERCALIFRAGILISTICEXPIALIDOCIOUS (Or Every Word Matters)
Sometimes, clients ask their counsel to provide a quick review of a purchase agreement, a summary, or to “just focus on the major points” or highlights. While a lawyer’s job is to balance protection of the client’s interests with efficiency, every word in a purchase agreement, or for that matter, any contract, matters. Let me give you two examples I have come across in contracts I have reviewed. Here is a sentence from one contract – “In addition to the Purchaser’s obligation to pay the amounts set forth in this Section 3.1, the Purchaser is also required to pay the Seller the amounts hereafter set forth.” What’s the mistake? “Hereafter” should have been “hereinafter”, as hereafter means after this or in the future. Hereinafter means further on in this document. A subtle but crucial distinction. Here’s another example. A purchase agreement contains a definition of Contracts that includes a list of specific agreements the purchaser will assume, or take over at the time of closing. The purchase agreement contains the following sentence – “The Purchaser agrees to assume all obligations under the contracts”. It is unclear what contracts the purchaser is taking over, as the large cap defined term was not used in the sentence. The lesson here is that the incorrect use of a word or the use of a strikingly similar but incorrect word can have a large negative monetary impact.
If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at firstname.lastname@example.org or 443-738-1522.
ABOUT GLENN D. SOLOMON
email@example.com | 443-738-1522
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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