Draft Ma Agreement From Precedent S02

Skill: Draft M&A Agreement from Precedent

1. Subject-matter triage (only if applicable)

• Confirm the deal type, parties, consideration mix, and governing law before drafting.
• Identify whether the precedent is being adapted for a stock purchase, not a different acquisition form.
• Separate mandatory agreement drafting from the companion issues memo; do not let the memo displace the SPA.
• If the source set includes multiple jurisdictions, multiple restrictive-covenant regimes, or multiple contemplated closing mechanics, enumerate them first and analyze each separately.

2. Failure modes the skill is correcting

• Drafting a non-compete as if geography, activity scope, or duration can remain vague when the governing law requires a fixed, enforceable description at signing.
• Failing to test restrictive covenants against the applicable jurisdiction’s public-policy limits, reformation rules, and local enforceability constraints.
• Carrying forward a precedent’s survival language without separating fundamental, general, and tax representations into distinct survival treatments.
• Omitting earnout mechanics when the term sheet contemplates contingent consideration but the precedent does not.
• Omitting rollover equity mechanics when the term sheet or drafting instructions require seller rollover participation.
• Leaving R&W insurance concepts out of the SPA when the transaction structure or instructions require them.
• Producing a memo that describes issues without closing each issue to the source documents, the governing provision, and the client consequence.
• Writing recommendations without a concrete action, accountable role, and timing anchor.

3. Legal frameworks / domain conventions that apply

• Non-compete enforceability must be analyzed under the governing-law jurisdiction and any other jurisdiction materially implicated by the covenantor’s operations; address scope of restricted activities, geography, duration, and any blue-pencil or reformation doctrine by name.
• If the target or seller operates across state lines, assess whether the covenant is vulnerable in any relevant state notwithstanding the chosen governing law.
• Fundamental representations should be treated as foundational title, authority, organization, capitalization, and similar core items, with the longest survival treatment the deal permits.
• General representations should follow the survival period specified in the term sheet or instructions, not the precedent’s default.
• Tax representations should survive through the applicable tax limitation period, subject to any negotiated extension or tail in the deal documents.
• Earnout provisions should be drafted as a complete economic regime: metric definition, measurement period, calculation method, reporting, dispute process, audit rights, covenant limitations, and anti-manipulation protections.
• Rollover equity provisions should cover mechanics of exchange or issuance, closing deliverables, transfer restrictions, vesting or forfeiture if applicable, and any tax or securities-law-facing coordination.
• R&W insurance provisions should coordinate indemnity caps, survival, notice mechanics, policy effectiveness, and any insurer-facing deliverables or acknowledgments if required by the transaction structure.

4. Analytical scaffolds

SPA drafting sequence:

1. Conform parties, structure, definitions, purchase price mechanics, closing conditions, indemnification, and ancillary documents to the term sheet and instructions.
2. Replace precedent-specific names, dates, and structure with the current transaction inputs; verify internal consistency across recitals, defined terms, schedules, and exhibits.
3. Add or complete earnout provisions if contingent consideration exists, and ensure the accounting, operational, and dispute mechanics are internally coherent.
4. Add or complete rollover provisions if seller equity rollover exists, including exchange mechanics and transfer restrictions.
5. Rework restrictive covenants to match the governing law and the target’s operating footprint, then test them for enforceability under each materially relevant jurisdiction.
6. Draft representation survival provisions by category:
   • fundamental reps: longest available treatment
   • general reps: deal-instructed survival
   • tax reps: tax-law limitation period or negotiated tail
7. Add R&W insurance mechanics only where the deal structure requires them, and align them with indemnity, basket, cap, and closing-effectiveness provisions.
8. Check that remedies, closing conditions, and post-closing covenants do not conflict with any earnout, rollover, or insurance concepts.

Drafting issues memo sequence:

1. List each open issue or inconsistency separately.
2. State what in the source set creates the issue.
3. Explain how the issue should be resolved in the SPA or related document.
4. Tie the issue to the governing law, the term sheet, the precedent, or the QoE summary as applicable.
5. Conclude each item with the practical consequence if left unresolved.
6. End with prioritized next steps for drafting or business decision-making.

When more than one item is in play, analyze each item on its own terms rather than collapsing them into a generic summary.

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

• Keep the SPA internally synchronized across preamble, definitions, economics, covenants, indemnities, and closing deliverables.
• Ensure the issues memo tracks the same transaction timeline as the draft SPA: pre-signing assumptions, signing, closing, post-closing adjustment, earnout periods, and survival windows.
• Align survival provisions vertically with the representation categories they govern, rather than using one blanket rule for every rep.
• Where a covenant or remedy depends on closing status or a post-closing measurement period, make that sequence explicit.
• If multiple jurisdictions matter, reconcile the most restrictive enforceability constraint with the deal’s business objective rather than assuming one governing law resolves all conflict.

6. Output structure conventions

• Produce the draft SPA as the primary deliverable and ensure it is substantively complete before any memo is prepared.
• Produce the drafting-issues memo as a separate companion document, not embedded in the SPA.
• Use conventional transaction-document organization rather than mirroring any source-document table of contents.
• Use issue-by-issue memo formatting with a short heading for each issue, followed by analysis and a recommendation.
• For the memo, include a clear severity designation for each issue using a consistent ordinal scale stated once near the top.
• Where legal conclusions are stated, identify the governing authority or doctrine supporting the conclusion by name and section, rule, or leading case as appropriate.
• End the memo with a concise Recommended Actions section that assigns each action to a role and timing anchor tied to the transaction.
• Before finishing, confirm that both deliverables are actually drafted content, not summaries, and that the SPA is the principal document.