A disclosure schedule is very imprtant!
In the process of putting together a merger or an acquisition of one company by another, there is a lot of negotiating to go on and a lot of representations made by the seller to impress the buyer. Whether those representations are in writing or speaking, the buyer will choose which ones are believable and can be relied on. If the buyer relies on something that turns out to be false, either generally or in a particular scenario, it could come back to haunt the seller and end up being a deal-breaker or an unexpected liability to the seller.
To protect against such disastrous results, experienced attorneys in the mergers and acquisitions specialty will prepare a Disclosure Schedule, which acts as a list of exceptions to the representations and warranties mentioned by the seller. It is a detailed list of all representations and warranties on which the buyer can rely. Any others cannot be enforced. This will indemnify the seller and its shareholders from liability for inaccuracies in all representations and warranties
Of all the different types of representations that are made during negotiations, the ones regarding intellectual property can have the most significant and far-reaching effects. Ownership rights and any encumbrances, limitations, and third party rights are important to the buyer. He will want to be able to put the software he owns to any and all uses for his benefit. Any restriction could also affect its value, as well as the use. The buyer will also want to know his full rights and restrictions, including possible litigation, for his use of third party software that is essential to the operation of his business.
The seller will want to qualify his representations based upon his knowledge of the terms and the materiality of the issue. That is not a substitute for not making an effort to understand the details. Rather it assumes he has done his due diligence, but there could be details that are not available to him. He will also want to limit his liability in scenarios where the liability may shift because of the commitments or actions of the buyer or other third parties, both before and after closing.
The attorneys at The Bradshaw Law Group are experienced in both simple and complex mergers and acquisitions. Their expertise in drafting disclosure schedules and all other necessary documents will assure you of maximum protection from liability, whether you are the buyer or the seller.
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