Draft Issues List Acquisition Agreement

Skill: Draft Issues List for Acquisition Agreement

1. Subject-matter triage

• This is a review-and-issue-spotting task, not a drafting-from-scratch task: read the seller draft, disclosure schedules, ancillary deal documents, and diligence notes together before writing the memo.
• Treat the agreement as the anchor document, but test each issue against schedules, exhibits, disclosure items, regulatory notices, financial diligence, and any support letters or board materials that bear on it.
• If a topic appears in more than one source document, analyze the interaction, not just the standalone clause.

2. Failure modes the skill is correcting

• Identifying earnings-adjustment concerns at a general level without separately evaluating each unsupported adjustment, tying it to the diligence source that supports or undermines it, and assessing the likely purchase price effect at the negotiated valuation metric.
• Failing to elevate a significant customer contract approaching expiration into a closing-condition or covenant analysis, rather than treating it as a routine representation issue.
• Treating regulatory notice obligations as boilerplate when they may affect timing, closing deliverables, or walkaway rights.
• Describing environmental risk without connecting the existing consent order, any disclosure schedule treatment, and any pre-closing investigation gap to a concrete deal consequence.
• Flagging earnout concerns without identifying the operating covenant needed to prevent intentional or structural suppression of the earnout metric.

3. Legal frameworks / domain conventions that apply

• Governmental change-of-control notice: determine whether notice to the relevant authority is a closing condition, interim covenant, or post-closing covenant, and test the agreement’s regulatory reps and compliance covenants for consistency with that structure.
• Environmental consent order disclosure: if an order exists, confirm the representations, schedules, and covenants expressly capture the order and the current compliance posture; a generic environmental representation is often inadequate if it omits a known order.
• Environmental Phase II gap: where a Phase I identified recognized conditions and no Phase II followed, address whether the buyer needs a pre-closing investigation condition, an escrow, or another risk-allocation mechanism.
• Earnout operating protection: if consideration includes an earnout, review whether the draft should require the buyer to operate the acquired business in good faith and avoid actions that would improperly depress the earnout metric, while preserving ordinary-course discretion.
• Unsupported earnings adjustments: evaluate each add-back or adjustment separately, identify the support status, and assess whether the aggregate unsupported amount should affect the purchase price negotiation or adjustment mechanism.
• Significant customer contract expiration: if a key customer agreement matures during the signing-to-closing window, determine whether renewal should be a condition to closing, a covenant, or at minimum a representation about renewal discussions and non-termination notice.
• Use controlling authority where the issue depends on a legal rule, regulatory obligation, or enforceability standard; cite the governing statute, regulation, or doctrine instead of stating a bare conclusion.

4. Analytical scaffolds

• Start by identifying each discrete issue, then assign it a severity level using one consistent ordinal scale: Critical, High, Medium, or Low.
• For each issue, work in this sequence:
  1. identify the relevant section of the draft and any interacting schedule or ancillary document;
  2. state what the draft currently says or what is missing;
  3. quantify the issue where the record permits, using the relevant transaction figure, deadline, covenant horizon, exposure, or similar source-based metric;
  4. explain the downstream consequence to the client;
  5. recommend a procedural fix in deal-drafting terms.
• When more than one asset, contract, regulatory notice, period, or adjustment is involved, enumerate the items first and analyze each separately rather than collapsing them into a single pass.
• Do not present earnings support issues in the aggregate only; separate the items by adjustment, support status, and likely negotiation significance.
• If a legal proposition is invoked, tie it to the controlling rule or authority supporting the recommendation.

5. Vertical / structural / temporal relationships

• Map each issue to the transaction stage it affects:
  • pre-signing diligence gap,
  • signing-to-closing condition,
  • closing deliverable,
  • post-closing covenant,
  • post-closing economics.
• For timing-sensitive matters, identify whether the relevant risk is triggered before closing, at closing, or after closing, and whether the draft currently places the burden on the buyer or seller.
• Cross-check whether a representation, covenant, disclosure schedule, or special condition already addresses the issue elsewhere; if so, explain whether it is adequate or needs to be upgraded.
• For customer, regulatory, and environmental items, note any temporal mismatch between the event date and the closing timeline.

6. Output structure conventions

• Open with a short severity key defining Critical, High, Medium, and Low.
• Organize the memo by priority, not by document order, unless a document-order reference is needed to orient the reader.
• For each issue, use a compact header and then four core lines in conventional memo form:
  • Agreement section / related document
  • Current status
  • Risk / consequence
  • Recommended revision
• Include a dedicated section for earnings-adjustment review that lists each adjustment separately, notes support status, and identifies any pricing impact the record supports.
• Include a dedicated section for environmental risk if consent order or site-investigation issues are present.
• Include a dedicated section for earnout protections if the draft includes contingent consideration.
• End with a Recommended Actions block that gives the next procedural steps, names the responsible role if apparent from the source set, and ties each action to a signing, closing, or diligence milestone.
• Keep the memo self-contained and practical; avoid narrative filler and avoid restating the whole deal except where needed to frame the issue.