Draft Ma Agreement From Precedent S01

Skill: Draft M&A Agreement from Precedent (Scenario 01)

1. Subject-matter triage

• Confirm the primary deliverable is a substantively complete stock purchase agreement adapted to the current deal, not a summary of changes.
• Treat the drafting issues memo as secondary, but required, and draft it only after the agreement is complete.
• If the source set includes multiple jurisdictions, covenant groups, earnout periods, closing adjustments, or rollover participants, separate them before drafting so each receives its own treatment.
• If the governing law differs from the precedent, identify every provision in the precedent that depends on that law and revisit it before finalizing the draft.

2. Failure modes the skill is correcting

• Reusing precedent language without conforming it to the current parties, consideration mechanics, deal structure, and defined terms.
• Omitting entirely new deal terms that are present in the term sheet but absent from the precedent, especially earnout, rollover, and insurance-related provisions.
• Missing state-law consequences when the precedent’s governing law, enforceability assumptions, or remedies framework no longer match the current transaction.
• Drafting restrictive covenants as if one uniform rule applies everywhere, instead of tailoring enforceability analysis to the relevant operating jurisdictions.
• Failing to separate fundamental, tax, and general survival periods or to align escrow mechanics with the current deal economics.
• Producing a memo that lists differences but does not explain why the differences matter for enforceability, closing, economics, or post-closing disputes.
• Drafting the companion memo before the agreement exists, or substituting commentary for operative contract text.

3. Legal frameworks / domain conventions that apply

• Start from the precedent, then conform all names, consideration, closing mechanics, ancillary deliverables, schedules, and definitions to the current transaction.
• Earnout drafting must address the measurement metric, the measurement period, operational covenants during the earnout, access and information rights, accounting principles, dispute resolution, and anti-manipulation protections.
• Rollover drafting must address who rolls, what is rolled, the exchange mechanics, equity form and timing, transfer restrictions, vesting or forfeiture concepts if applicable, and the related tax or securities framing required by the deal structure.
• Governing law changes require checking whether the precedent’s approach to fiduciary duties, appraisal or dissent rights, equitable relief, and specific performance remains valid under the new law.
• Restrictive covenant enforceability should be analyzed jurisdiction by jurisdiction for each operating or employment location implicated by the target’s footprint.
• Where a jurisdiction requires a legitimate transaction nexus, geographic tailoring, or narrower post-closing restraints, draft the covenant to fit that rule rather than relying on a single universal clause.
• Where the governing law permits reformation, partial enforcement, or blue-penciling, include a narrowly tailored reformation concept only to the extent consistent with the governing law and transaction posture.
• If representations and warranties insurance is part of the deal, align the agreement with policy-driven closing conditions, no-claims or bringdown concepts, cap and retention architecture, and any policy effectiveness representation required at closing.
• Survival periods should be stated by category, not left to generic precedent language, and should reflect the current allocation of risk among fundamental, tax, and general representations.
• Escrow provisions should be revised to match the current deal’s amount, duration, release mechanics, and interaction with any insurance or indemnity cap structure.
• For every legal proposition relied on in the draft or memo, anchor the proposition in the governing contract principle, applicable corporate law rule, enforceability doctrine, or insurance-related requirement recognized in the relevant jurisdiction.

4. Analytical scaffolds

• Draft the agreement in the order a transaction lawyer would build it: parties and structure, purchase mechanics, closing conditions, covenants, reps and warranties, indemnification, special deal terms, and then ancillary exhibits and schedules.
• For each precedent provision, ask whether it remains usable, needs tailoring, or must be replaced because the current deal changes the legal or economic premise.
• For each term-sheet item absent from the precedent, draft it as a full operative provision rather than a placeholder.
• For each restrictive covenant, identify the jurisdictions implicated by operations or personnel, then draft the covenant with the strictest applicable enforceability overlay in mind.
• For each earnout or rollover concept, trace the mechanics from definition through calculation, timing, administration, dispute procedure, and remedy.
• For each insurance-related concept, align the agreement’s indemnity and closing-condition language to the policy’s actual function in the transaction.
• In the issues memo, organize each point by the nature of the deviation: deal economics, new drafting, governing-law consequence, restrictive covenant tailoring, insurance integration, or survival/escrow change.
• For each issue in the memo, state what changed from the precedent, why the change was necessary, and what practical consequence it has for the client’s closing position or post-closing risk allocation.

5. Vertical / structural / temporal relationships

• Treat the agreement as a hierarchy: overarching transaction terms control the schedules, and defined terms control repeated clause-level mechanics.
• Treat closing as the pivot point for conditions, deliveries, escrow funding, insurance effectiveness, rollover issuance, and initial bringdown of representations.
• Treat post-closing periods separately for covenant compliance, earnout administration, indemnification claims, escrow release, and survival of representations.
• If multiple operating jurisdictions are implicated, map each restrictive covenant to the relevant jurisdictional group rather than using one generalized rule.
• If multiple seller or rolling equityholder groups exist, separate their obligations where the economics, representations, or transfer restrictions differ.
• If the deal includes both escrow and insurance, specify which losses are expected to be borne through each channel and how the two regimes interact over time.
• If the agreement changes governing law from the precedent, review every clause with a remedy or enforceability consequence, including exclusivity of remedies, injunction language, and reformation concepts.

6. Output structure conventions

• Produce the stock purchase agreement as the principal, substantive document with complete operative clauses and integrated defined terms.
• Produce the drafting issues memo as a separate document after the agreement, using an issue-by-issue format with concise but complete explanations.
• In the memo, identify material deviations from the precedent, provisions drafted from scratch, governing-law implications, jurisdiction-specific restrictive covenant treatment, insurance additions, and escrow/survival changes.
• Include a clear recommendation for each material issue, tied to the responsible drafting or deal team function and the next transaction milestone.
• Use conventional transaction-document headings and numbering; do not mirror any hidden checklist or expose internal rubric language.
• Confirm in the working process that the agreement file is complete and non-empty before treating the memo as finished.
• Confirm in the working process that both requested files are produced and contain operative content, not merely references to what would be drafted.