If you’re a regular reader, you know I’m a big fan of the M&A training cartoons put out by Hogan Lovells Cadwalader’s Rick Climan, Keith Flaum & Jane Ross.  They’ve recently come out with a new 15-minute program on “How to Negotiate the ‘No Undisclosed Liabilities’ Rep in an M&A Deal” that’s a nice addition to their catalogue. Here’s an excerpt from the description of the program on its YouTube page:

The new cartoon is the sixth in the series of popular M&A negotiating cartoons produced at Hogan Lovells Cadwalader by Rick, Keith, and Jane. Like the other cartoons in the series, this cartoon is intended to teach transactionally oriented associates and law students the intricacies of negotiating contentious issues that arise in M&A deals. Senior lawyers, as well as in-house practitioners and accounting professionals, may also find the new cartoon instructive and illuminating.

As Rick observes, the “no undisclosed liabilities” representation is one of the most important reps in an M&A deal, and the negotiation of the rep “has as much to do with accounting standards as it does… with lawyering.” Rick, representing the sellers, argues for a narrow version of the rep, focused only on GAAP liabilities, while Keith, representing the buyer, seeks a much broader version of the rep that covers contingent, unmatured and potential future liabilities as well. The cartoon concludes by presenting a potential compromise that may carry the day in some M&A scenarios

Rick, Keith and Jane do a terrific job distilling complex concepts in an accessible and understandable fashion. In an era where training new lawyers is becoming ever more challenging, these free resources are a great public service to the profession.

– John Jenkins