Representations and Warranties in Stock Purchase Agreements
Representations and warrantees from the company are almost always present as part of a full-blown Stock Purchase Agreement. These can go on for pages and pages, as the investor wants to make sure that he flushes out any concerns with the business. Here is a listing of the most important concerns an investor will want addressed:
- The exact outstanding capitalization of the company
- That the company's financial statements are true and correct in all material respects and have been prepared in accordance with generally accepted accounting procedures
- That the company has no liabilities other than those reflected in its latest balance sheet and those occurred in the ordinary course of business since the date of the last balance sheet
- That the company owns all of the assets it purports to own, without liens or encumbrances except those disclosed
- That the company's intellectual property and products don't infringe the rights of others
- That the company is in compliance with all laws in connection with its operations
