May 5, 2004


As we all know, buyers often insist, even after the seller has given 25 plus pages of exhaustive representations, that the seller also add a “full disclosure” representation. Inspired by Rule 10b-5, these provisions typically read something like this:

“No representation or warranty or other statement made by Seller or either Shareholder in this Agreement in connection with the Contemplated Transactions contains any untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading.”

Buyers will be very insistent that this representation is standard. Our 4th Annual Deal Points Study (see below for the Study parameters) found, however, that a full disclosure representation appeared in only 64% of 2003 deals. With sellers successfully keeping this representation out more than one-third of the time, buyers’ counsel should not be surprised in 2004 when faced with an emboldened seller claiming that this representation is not necessarily standard operating procedure.

4th Annual Deal Points Study Parameters: We reviewed acquisition agreements relating to public company acquisitions of private companies with transaction values of between $25M and $150M (pulled from the LiveEDGAR M&A Database).

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