The Warranties and Covenants (“W&C”) primarily protect the buyer. They cover all aspects of the business from employees and customer contracts to accounting and tax provisions. These should be reviewed in detail alongside the due diligence findings to ensure they are not overly onerous and that your position is also reasonably safeguarded.
The W&Cs should be considered in detail by your legal and tax advisers. Often, these start as generic clauses that may not reflect the transaction or your business. These are often heavily negotiated parts of the documentation and link directly to the disclosure documents such as the disclosure letter.
