Managing Risk and Liability in the Sale of a Business
n the rush to get a deal done, Sellers often overlook the risks that can arise during the post-sale period. Risks can be mitigated by (i) planning for an eventual sale far in advance of a transaction; (ii) understanding the risks that arise post-sale and mitigating them; (iii) paying attention to the transaction documents; (iv) caps on liabilities; and (v) indemnity baskets. Mitigation is the name of the game in any sale of the business. Knowing your advisors and their liability limits.
- Disclose, disclose, disclose
- Those who rush have a higher risk of overlooking material risk/disclosure items
- Structuring and negotiating the deal to reduce exposure
- Use careful, experienced and financially sound advisors
- When to use Rep & Warranty Insurance
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