Definitive and Purchase and Sale Agreements

Merger and Acquisition Definitive Agreement
A definitive agreement or purchase and sale agreement is the final agreement that is signed during the process of buying or selling a business. It outlines the terms and conditions for buying or selling a company, such as the payment structure, the representations, the termination clause, and other important considerations. Unlike a letter of intent, which is a non-binding, preliminary document, “definitive” means the agreement is the final one to be signed before the closing.

A definitive agreement and purchase and sale agreement transfers the ownership of a business. A business is nothing more than a collection of individual assets, owned by an entity, such as a corporation or LLC. The purchase agreements to acquire those assets can take two general forms:

  • Stock Purchase Agreement – This transfers the shares of the entity, otherwise known as a corporation or LLC, that owns the assets of the business. By purchasing the shares of stock owned by the entity, the buyer then owns the assets that were previously owned by the entity. Shares in an LLC are technically called “membership interests.” However, for sake of simplicity, most parties refer to the transaction as a “stock sale.”
  • Asset Purchase Agreement – This agreement transfers the individual assets from the seller to the buyer. However, the seller retains ownership of the shares of the entity, and the buyer typically forms a new entity for the assets he or she bought.

Joint Venture Definitive Agreement
A Joint Venture Agreement is used when two or more business entities or individuals enter into a temporary business relationship (joint venture) for the purposes of achieving a mutual goal such as entering a new market or developing a new product. The Joint Venture Agreement sets out the terms and obligations of the members and the joint venture.

The following is included in a Joint Venture Agreement:

  • Place of business
  • The type of joint venture
  • Venture details, such as its name, address, purpose, etc.
  • Start and end date
  • Venture members and their capital contributions
  • Member duties and obligations
  • Meeting and voting details
  • Management, dissolution, and assignment of interest details
  • Non-compete, confidentiality, and dispute resolution clauses

Definitive Agreement Templates

 

M&A and JV Agreement Templates                          

 

Deal Documents
To effectively complete the M&A deal, Joint Venture, or Strategic Alliance, please click below to get the various documents required:

                                             

Term Sheet                    Due Diligence               Company                        Definitive
Letter of Intent                                                     Valuation                        Agreement
MOU

                               

Post Merger                     Governance                  Approach
Integration                       & Board                         Targets