Draft Acquisition Agreement Provisions

Skill: Draft Acquisition Agreement Provisions from Precedent and Term Sheet

1. Subject-matter triage (only if applicable)

• Treat the primary task as drafting operative acquisition-agreement provisions, not summarizing them.
• If the source set includes both a precedent and a term sheet, identify which controls each economic and risk-allocation point before drafting.
• If the documents indicate different transaction structures, determine whether the provision set can be adapted cleanly or must be re-anchored to the governing structure.
• If the source materials include multiple possible escrows, survival periods, basket formulations, or transfer regimes, separate them before analysis rather than blending them into a generic draft.

2. Failure modes the skill is correcting

• Adapting a precedent without flagging a structural mismatch when the precedent and the current transaction use different acquisition structures, which requires restructuring core provisions around asset identification, liability allocation, and transfer mechanics.
• Omitting the companion cover memo that identifies discrepancies between the term sheet and the precedent, especially where the transaction structure, basket formulation, permit-transfer path, or escrow treatment diverges.
• Drafting purchase-price or indemnity provisions that track precedent language mechanically instead of conforming to the deal-specific economics and risk allocation.
• Failing to separate general indemnity mechanics from any special-purpose escrow or other separate recourse bucket.
• Missing survival-period differences across representations and warranties categories, or collapsing them into a single blanket survival.
• Describing issues without stating the negotiation consequence or the recommended fix.
• Treating the memo as optional when the assignment requires both operative draft and issue-spotting analysis.

3. Legal frameworks / domain conventions that apply

• Deal-structure differences: in a stock purchase agreement, equity transfers and the target entity generally retains its assets and liabilities; in an asset purchase agreement, specific assets are enumerated and only specified liabilities are assumed, with excluded assets and excluded liabilities retained by the seller. Adapting provisions from one structure to the other requires reworking the core economic and allocation mechanics, not merely changing defined terms.
• Regulatory permit transfer: permit handling depends on whether the permit is entity-based or asset-based, and whether the transaction triggers notice, consent, novation, or a fresh application. The draft should conform to the transfer path supported by the transaction structure and applicable regulatory scheme.
• Basket formulation: a tipping basket and a deductible basket allocate losses differently. The draft must align with the term sheet’s basket type and make the mechanics internally consistent with the indemnity section and any escrow recourse.
• Environmental escrow: where the source materials identify environmental risk or remediation exposure, separate escrow treatment may be required, with clear funding, release, agent, and draw mechanics tied to the specified risk.
• Survival periods by category: fundamental representations typically receive the longest survival, tax representations track applicable limitation periods plus any negotiated tail, IP representations often receive an intermediate survival, and general business reps typically survive for a negotiated finite period.
• General contract conventions: purchase-price, indemnity, and general provisions should cross-reference one another consistently; defined terms should be used uniformly; and drafting should preserve internal coherence across articles and schedules.

4. Analytical scaffolds

• Draft the requested articles as operative contractual text suitable for markup, not as commentary or paraphrase.
• Build the draft from the controlling term sheet economics and risk allocation, then conform precedent language only where consistent with those controls.
• When the source set contains more than one relevant scale, period, party, basket, escrow, or transfer path, list the alternatives explicitly before deciding which one the draft should implement.
• For each identified discrepancy between the sources, state:
  • what the term sheet requires,
  • what the precedent does,
  • why the difference matters in the current structure, and
  • the recommended drafting or negotiation resolution.
• Preserve the internal logic of the articles:
  • consideration and payment mechanics should align with any holdback, escrow, adjustment, or earnout concept;
  • indemnity mechanics should align with survival, caps, baskets, and exclusive-remedy language;
  • general provisions should support enforcement, interpretation, venue, notices, and amendment mechanics without reintroducing unresolved commercial terms.
• Where a provision depends on a legal or regulatory rule, name the governing authority or contract convention supporting the drafting choice rather than stating the conclusion abstractly.
• If the source documents do not provide enough detail to finalize a point, leave a clear placeholder or bracketed choice rather than inventing transaction economics.

5. Vertical / structural / temporal relationships (only if applicable)

• Track whether each provision operates at signing, closing, post-closing, or during a survival period, and draft the timing language accordingly.
• Distinguish among pre-closing transfer steps, closing deliveries, post-closing adjustment mechanics, and post-closing indemnity claims.
• Separate general indemnity recourse from any special escrow or targeted reserve so the recourse stack is understandable.
• If more than one category of claim is present, keep the survival and claim procedure aligned to each category rather than using one period for all claims.
• If a permit or consent is needed before closing, flag any condition-precedent timing risk and any fallback notice or post-closing covenant if applicable.

6. Output structure conventions

• Produce one deliverable containing two distinct parts: the drafted acquisition-agreement provisions and a companion cover memo.
• Draft the requested articles in complete contractual form, with article-level headings and clause-level organization consistent with an SPA.
• Use standard transactional drafting conventions, including defined terms, operative verbs, and internal cross-references, without explaining the drafting in-line.
• The cover memo should use an issue-by-issue format with a clear severity label for each issue, a concise statement of the discrepancy, the contractual or regulatory basis for the concern, and a recommended resolution.
• For each memo issue, include the practical consequence of the mismatch or gap and tie it to the relevant article or schedule it affects.
• End the memo with a concise Recommended Actions block that assigns the action to the relevant deal role and anchors it to signing, closing, or another transaction milestone.
• Keep the draft and memo separate enough that a reader can use the operative text independently while still seeing the negotiation points at a glance.