Skip to content
- Overview
- Outline of Steps of Typical Acquisition by Asset Purchase Agreement
- Letter of Intent
- Purchase Agreement
- “Executory Period”: Post-Signing to Closing
- Governmental and other third-party consents
- Preparation for closing
- Closing
- Post-Closing
- Letter of Intent
- Letter as “skeleton” of purchase agreement, setting forth “agreement in principle” and general understandings of the parties
- Legally binding agreement vs. agreement to negotiate in good faith
- Typical points addressed:
- Assets (real property, equipment, licenses, contracts, etc.)
- Purchase price and method of payment
- Subject to execution of definitive agreement with customary representations, warranties and covenants
- Due diligence rights
- Key government consents – FCC and PTFP
- Exclusivity
- Confidentiality
- Escrow deposit
- Termination date and other “outs”
- The Purchase Agreement
- The negotiation process
- Included and excluded assets in asset acquisitions
- Included: real property and tangible personal property, licenses, copyrights, trademarks & other intangibles, assumed contracts
- Excluded: cash on hand and cash equivalents, insurance policies, certain books and records, employment agreements & benefit plans
- Accounts receivable
- Purchase Price
- Adjustments to purchase price: prepaid revenues, rent, utilities, taxes and other prorations; accounts receivable; specific liabilities
- Earnest money escrow: liquidated damages
- Assumption of Liabilities and Obligations
- Representations and Warranties of Seller/Buyer
- Pre-Closing Covenants
- Seller’s affirmative covenants
- Seller’s negative covenants
- Conditions to Closing
- Conditions to Buyer’s obligations
- Conditions to Seller’s obligations
- Contrast failure to close due to breach of representations and warranties (liability for damages) with failure of closing condition to occur
- Termination Rights
- Terminating events; “drop-dead” date
- Survival of Representations; Indemnification
- Miscellaneous Provisions
- Commissions and brokerage fees
- Filing fees (FCC filing fee) and counsel expenses
- The Executory Period: Post-Signing to Closing
- Governmental filings and other governmental approvals
- Third-party consents; assignment of contracts and leases
- UCC, lien and judgment searches and releases
- Title commitments, surveys and environmental reports
- Conduct of business in ordinary course and preservation of assets
- Additional Buyer due diligence: access to and review of information
- General corporate “clean-up” of items uncovered in due diligence process; authorizing resolutions
- Closing
- Standard closing documents; the purchase agreement as “road-map”
- Prorations: prepaid revenues, rents, taxes, utilities, contractual obligations, barter contracts
- Notification to governmental authorities and other third parties
- Use of closing or side agreements to handle problems at closing
- Post-Closing