In past columns, I’ve talked about the variety of tactics buyers and sellers in cash-financed acquisitions of privately held companies use to expand or reduce, respectively, the scope of the seller’s representations and indemnification obligations. They battle over qualifiers like materiality and deductibles, materiality scrape, sandbagging and other issues.1
But what if there was a way for buyers, in one fell swoop, to significantly expand the scope of the seller’s representations to cover not just the seller’s untrue statements, but also material omissions, and for good measure, even misstatements or omissions made outside the four corners of the acquisition agreement? That’s pretty much what happens when the seller agrees to a full disclosure representation.
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