Draft Spa Markup Seller Perspective

Skill: Seller-Side APA Markup

1. Subject-matter triage

• Treat this as a seller-side markup and issue-spotting exercise over a buyer draft, not a neutral summary.
• Start by identifying the operative documents in the source set: the draft agreement, the LOI or term sheet, and any ancillary deal notes or schedules.
• If the source set reflects only one buyer draft and one LOI, say so explicitly before analyzing; if multiple versions or exhibits exist, enumerate them first and track version-specific differences.
• Prioritize provisions that shift risk, restrict operations, alter economics, or create post-closing dispute leverage.

2. Failure modes the skill is correcting

• The buyer draft is reviewed clause-by-clause without measuring whether seller-favorable protections customary in the deal type are missing, diluted, or one-sided.
• The LOI is treated as background only, so omitted agreed points and newly introduced obligations are not flagged.
• The markup describes problems but does not propose usable replacement language.
• Redline comments rely only on formatting and become invisible when exported or pasted.
• Issues are identified without ranking them, making it hard to separate negotiation-critical points from polish.
• The memo notes a defect but does not tie it to the affected clause set, the practical consequence, or the operational impact on the seller.
• Drafting points are reviewed in isolation, so interactions among reps, covenants, indemnity, escrow, survival, and dispute provisions are missed.
• The review assumes legal conclusions without naming the governing doctrine or drafting convention supporting the point.

3. Legal frameworks / domain conventions that apply

• Asset purchase agreements are typically analyzed against the allocation of pre-closing vs. post-closing risk, ordinary-course operating flexibility, and post-closing remedies.
• Material adverse effect language should be checked for standard carve-outs and for disproportionate-effect qualifiers where used in the draft.
• Interim operating covenants should be tested for whether they preserve ordinary-course business operations without repeated consent requests.
• Earnout mechanics, if present, should be evaluated for measurement clarity, administrator neutrality, and cliff-risk versus staged economics.
• Dispute-resolution mechanics should be checked for neutrality, administrability, and whether the selected decision-maker has an apparent conflict.
• Financial statement, compliance, and operational reps should be checked for materiality qualifiers and knowledge qualifiers where market practice supports them.
• Indemnity mechanics should be reviewed holistically: scope, caps, baskets, escrows, deductibles, survival, exclusive-remedy language, offsets, and claim procedure.
• LOI alignment requires a point-by-point comparison of agreed economics and control points against the operative draft; deviations should be treated as negotiation items, not drafting noise.
• Cite the governing authority for any legal proposition stated in the memo, including the applicable contract-construction rule, corporate-law principle, statute, regulation, or recognized market convention as appropriate.

4. Analytical scaffolds

• Begin with document mapping: identify the draft version, the LOI version, and any related supporting materials; note any internal inconsistencies before diving into clause review.
• For each major issue, identify the affected clause, the missing or seller-unfriendly concept, the operative change needed, and the practical result if left unchanged.
• When a clause admits multiple variants, compare the draft against the seller-favorable market alternative and state which version you are proposing.
• When an issue turns on a threshold or scope concept, anchor the concern to the figures, timing periods, or operational triggers appearing in the source documents, without inventing new deal economics.
• When a provision interacts with another article or schedule, cross-reference the related provision in the issue description so the reader can see the chain of effects.
• Where the draft departs from the LOI, distinguish between a true inconsistency, a missing agreed term, and a newly added seller burden.
• For each proposed revision, supply concrete markup language that can be dropped into the agreement and annotate why the change is requested.
• If a provision is acceptable as drafted, say so briefly and move on; do not pad the memo with non-issues.

5. Vertical / structural / temporal relationships

• Check how pre-closing covenants flow into closing conditions, bring-downs, termination rights, and post-closing indemnity.
• Test whether any seller consent right or approval right is functionally nullified by a later covenant or a unilateral buyer determination.
• Review whether post-closing claim procedures, notice periods, and survival periods are internally consistent with the scope of the reps and indemnities they govern.
• Where a dispute mechanism depends on timing or sequencing, confirm that the steps are administrable and that no clause silently shortens the seller’s response window.
• If earnout, holdback, escrow, or purchase-price adjustment mechanics are present, review their timing together rather than as isolated provisions.
• If the draft allocates risk by subject matter across multiple sections, make sure the memo tracks those relationships so a revision in one place does not create an unintended gap elsewhere.

6. Output structure conventions

• Produce a single seller-side markup memorandum.
• Open with a short orientation that identifies the source documents reviewed and states whether the draft appears generally aligned with the LOI.
• Define an ordinal severity scale once at the top and apply it consistently to every issue entry.
• Organize issues from highest to lowest importance.
• For each issue, include:
  • the clause or topic;
  • a severity label;
  • a concise explanation of the concern;
  • the relevant source-document cross-reference;
  • the downstream consequence for the seller;
  • proposed revision language or a precise markup instruction;
  • a brief market note only if it helps negotiation.
• Use a robust textual redline convention in the memo so the proposed changes remain readable outside of formatting, such as [DELETED: …], [INSERTED: …], or [REPLACED: old → new].
• Include a short rationale tag with each proposed change so the reason for the edit is explicit in plain text.
• End with a Recommended Actions section that assigns next steps to counsel or the business lead and ties each step to the transaction timeline or closing process.
• Keep the memo concise, prioritized, and negotiation-ready; do not restate the agreement except to support a proposed edit.