Understanding Caps and Baskets in M&A Transactions

25/10/2023 26 min Episodio 156
Understanding Caps and Baskets in M&A Transactions

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Episode Synopsis

Below is what we discuss in this episode all about Caps & Baskets in an M&A Process:IntroductionDefinition of indemnification provisionsImportance of indemnification provisions in M&A dealsCaps and basketsDefinition of caps and basketsDifferences between caps and basketsWhy caps and baskets are neededCapsUpper dollar limit of the seller’s indemnification obligations to the buyerNegotiation of indemnification cap – differences between buyers and sellers hereDifferent caps for different types of lossesGeneral indemnification cap vs. fundamental representations and warrantiesBasketsThreshold amount of losses that the buyer must incur before seller’s indemnification obligations are triggeredNegotiation of basket size and structure – difference between buyers and sellersWhen to talk about these items:Might see an introduction in LOINear the end of a purchase agreementListen to Shoot the Moon on Apple Podcasts or Spotify.
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