James Madison once famously said, “If men were angels, no government would be necessary.” One might similarly assert, with apologies in advance to our fourth president, that “if all parties to M&A transactions were angels, acquisition agreements would only be one page long.”
The reality, of course, is quite different. Acquisition agreements for both private and public M&A transactions regularly exceed 80 or more pages. Much of the content of these agreements is comprised of countless representations and warranties that sellers make to acquirers regarding the finances, operations, employees, assets and liabilities of the business being sold in the transaction. Many more pages are devoted to addressing what should happen if one or more of those representations turns out to be incorrect.
