M&A Deal Structuring & Term Sheet Design
Required Inputs
Transaction Overview : Buyer, target, deal rationale, and indicative valuation range.Buyer Type : Strategic acquirer or financial sponsor (PE fund).Target Entity Type : C-corp, S-corp, LLC, partnership, or international entity.Consideration Budget : Available cash, appetite for stock issuance, and debt capacity.Key Sensitivities : Seller priorities (cash at close, tax efficiency, retention of upside) and buyer priorities (risk allocation, price protection, integration flexibility).
Execution Steps
1. Deal Structure Selection
Choose the legal structure for the transaction. Each has materially different tax, liability, and operational consequences.
Structure Comparison Table
Dimension
Asset Purchase
Stock Purchase
Statutory Merger
What transfers Selected assets and liabilities
Entire legal entity (shares)
Target merges into buyer or sub
Successor liability Generally no (except specific carve-outs)
Yes — all liabilities transfer
Yes — surviving entity assumes all
Tax to seller (C-corp) Double tax (corporate + shareholder)
Single tax at shareholder level
Single tax (if structured properly)
Tax to seller (S-corp/LLC) Single tax at owner level
Single tax at owner level
Single tax at owner level
Buyer tax benefit Step-up in asset basis (higher future D&A)
No step-up (unless 338(h)(10) election)
No step-up (unless 338(h)(10))
Contract assignment Requires consent per contract
Automatic (unless change-of-control clause)
Automatic by operation of law
Employee transfer New employment offers required
Employees remain with entity
Employees remain with surviving entity
Third-party consents Extensive (each asset/contract)
Limited (change-of-control only)
Limited
Minority shareholders N/A
Must acquire 100% or deal with holdouts
Squeeze-out via appraisal rights
Regulatory complexity Lower
Moderate
Higher (board + shareholder approvals)
Best for Buying specific divisions; avoiding liabilities
Clean companies; speed to close
Public targets; tax-efficient combinations
Decision Framework
Score each factor 1-5 based on deal circumstances:
Factor
Favors Asset Deal
Favors Stock Deal
Favors Merger
Score
Buyer wants tax step-up
5
1
1
Seller wants single tax layer
1
5
5
Significant contingent liabilities
5
1
1
Many non-assignable contracts
1
5
5
Target has valuable NOLs
1
4
4
Minority shareholder squeeze-out needed
1
1
5
Partial acquisition (division/unit)
5
1
1
Speed to close priority
2
4
3
Total
Recommend the structure with the highest total score. Document trade-offs for the runner-up.
2. Consideration Design
Consideration Types
Type
Description
Seller Impact
Buyer Impact
Cash Immediate payment at close
Certainty; immediate tax event
Cash outflow; possibly debt-funded
Stock Buyer equity issued to seller
Tax deferral possible (tax-free reorg); retains upside
No cash outflow; dilution to existing shareholders
Earnout Contingent payments tied to future performance
Bridges valuation gap; deferred and uncertain
Reduces upfront risk; creates alignment incentives
Seller note Deferred cash payment (promissory note)
Installment sale tax treatment; credit risk on buyer
Reduces upfront cash; cheaper than bank debt
Rollover equity Seller reinvests portion into buyer/NewCo
Tax deferral on rolled amount; ongoing participation
Reduces cash need; aligns seller post-close
Consideration Mix Design
State the proposed mix as a table:
Component
Amount ($M)
% of Total
Key Terms
Cash at close
Funded by [source]
Stock consideration
Exchange ratio: [X] buyer shares per target share; collar/fixed
Earnout
Metric: [revenue/EBITDA]; Period: [X] years; Cap: $[X]M
Seller note
Term: [X] years; Interest: [X]%; Subordination: [senior/sub]
Rollover equity
[X]% of seller proceeds rolled into NewCo
Escrow/holdback
[X]% held for [X] months for indemnification
Total consideration 100%
3. Purchase Price Mechanism
Choose between the two standard approaches:
Dimension
Locked Box
Completion Accounts
Reference date Pre-signing balance sheet date
Closing date balance sheet
Price certainty Fixed at signing (seller-friendly)
Adjusted post-closing (buyer-friendly)
Leakage protection Seller covenants against value extraction post-locked-box date
N/A — price adjusts to actual
Working capital Included in locked-box price
True-up to agreed target NWC
Cash / debt Fixed at locked-box date
Adjusted to actual at close
Dispute risk Low (price is fixed)
Higher (completion accounts disputed)
Best for Competitive auctions; clean businesses
Volatile working capital; buyer-friendly deals
If using completion accounts , define:
Adjustment
Target / Peg
Mechanism
Net working capital
$___M (based on trailing [X]-month average)
Dollar-for-dollar adjustment above/below target
Net debt
$0 (cash-free / debt-free basis)
Deducted from headline price
Cash
$0 (cash-free / debt-free basis)
Added to headline price
Transaction expenses
$0
Deducted from headline price
CapEx true-up
$___M minimum spend
Shortfall deducted from price
4. Key Deal Terms
4a. Representations and Warranties
Category
Seller Reps (typical)
Buyer Reps (typical)
Fundamental Authority, organization, capitalization, title to shares
Authority, organization
Financial Accuracy of financial statements, no undisclosed liabilities
Solvency, available funds
Operational Material contracts, compliance with laws, litigation, IP, employees, tax, environmental, insurance
—
Bring-down All reps true at signing and closing
All reps true at signing and closing
Survival periods : Fundamental reps (indefinite or 5-7 years); General reps (12-24 months); Tax reps (statute of limitations + 60 days); Environmental (3-6 years).
4b. Indemnification
Parameter
Market Range
Recommendation
Cap (general) 10-20% of enterprise value
[X]% based on risk profile
Cap (fundamental/fraud) 100% of purchase price
Full recourse
Basket (deductible) 0.5-1.5% of EV
[X]% — tipping vs. true deductible
Mini-basket (de minimis) $[X]K per claim threshold
Exclude trivial claims
Escrow amount 5-15% of purchase price
$[X]M held for [X] months
Escrow release 12-24 months post-close
[X] months, partial release at [X] months
R&W insurance Increasingly common; 2-4% premium
Buy-side policy recommended if > $[X]M EV
4c. Material Adverse Change (MAC) Clause
Define what constitutes a MAC allowing the buyer to terminate:
Included in MAC Definition
Carved Out (NOT a MAC)
Material decline in target's business, operations, financial condition
General economic or industry-wide changes
Loss of key customers representing > [X]% revenue
Changes in law or accounting standards
Regulatory action materially impairing operations
Effects of the announced transaction itself
Material breach of reps or covenants
Pandemics, natural disasters (negotiate)
Changes in financial markets generally
Materiality qualifier : MAC must be material to the target's business "taken as a whole" and must be "durable" (not temporary).
4d. Additional Key Terms
Term
Description
Market Standard
Non-compete Seller restricted from competing post-close
2-4 years; defined geography and scope
Non-solicit Seller cannot recruit target employees
2-3 years; covers employees and customers
Conditions precedent Required before closing
Regulatory approvals, third-party consents, financing condition (PE only), no MAC
Interim operating covenants Seller runs business in ordinary course between sign and close
Defined positive and negative covenants; materiality thresholds
Termination rights Circumstances allowing either party to walk
Longstop date, regulatory failure, uncured breach, board fiduciary out
Break fee / reverse break fee Penalty for termination
2-4% of EV (target break fee); 3-6% (reverse break fee for financing failure)
Go-shop / no-shop Post-signing solicitation rights
No-shop standard; go-shop in PE deals (20-40 days)
5. Earnout Design (if applicable)
Earnouts require careful design to avoid disputes:
Design Element
Recommendation
Metric Revenue (harder to manipulate) preferred over EBITDA (subject to cost allocation)
Measurement period 1-3 years; annual measurements with interim payments
Targets Tiered: threshold (floor), target (midpoint), stretch (cap)
Accounting treatment Specify GAAP/IFRS basis; define permitted and excluded adjustments
Operational covenants Buyer commits to operate business in manner consistent with earnout achievement
Dispute resolution Independent accountant for calculation disputes; arbitration for covenant disputes
Acceleration Full earnout payable if buyer materially changes business or sells target
Cap Maximum total earnout payment = $[X]M
6. Tax Implications Summary
Structure
Seller Tax Treatment
Buyer Tax Treatment
Key Consideration
Cash asset purchase
Ordinary income on recaptured depreciation; capital gain on goodwill
Step-up in basis; amortize goodwill over 15 years (Section 197)
Best buyer tax outcome; worst seller tax outcome (C-corp double tax)
Cash stock purchase
Capital gains on share sale
No step-up; carryover basis
Clean for seller; suboptimal for buyer
Stock purchase + 338(h)(10)
Treated as asset sale for tax
Step-up in basis (same as asset deal)
Requires both parties' agreement; only for S-corps and subs
Tax-free reorganization (stock-for-stock)
Tax deferred on stock received
Carryover basis in target assets
Requires continuity of interest (>40% stock); no step-up
Installment sale (seller note)
Gain recognized as payments received
Interest deductible
Seller defers tax; must meet installment sale rules
Recommend structure based on combined tax efficiency. Model the after-tax proceeds to the seller under each alternative.
Output Template
## Deal Structure: [Buyer] Acquisition of [Target]
**Date**: [Date] | **Indicative EV**: $[X]M | **Structure**: [Asset/Stock/Merger]
### Transaction Summary
| Item | Detail |
|---|---|
| Buyer | [Name and type] |
| Target | [Name, entity type, jurisdiction] |
| Enterprise value | $[X]M |
| Equity value | $[X]M |
| Structure | [Asset purchase / Stock purchase / Merger] |
| Consideration | [Cash/Stock/Mixed — summary] |
### Structure Rationale
[Why this structure was selected over alternatives, with reference to scoring]
### Consideration Mix
| Component | Amount ($M) | % of Total | Key Terms |
|---|---|---|---|
| ... | | | |
### Purchase Price Mechanism
[Locked box or completion accounts with adjustment mechanics]
### Key Terms Summary
#### Representations and Warranties
[Summary of scope and survival periods]
#### Indemnification
[Cap, basket, escrow, R&W insurance recommendation]
#### MAC Clause
[Definition and carve-outs]
#### Restrictive Covenants
[Non-compete, non-solicit scope and duration]
#### Conditions Precedent
[Required approvals and conditions for closing]
#### Termination Rights
[Break fees and termination triggers]
### Earnout Structure (if applicable)
[Metric, targets, measurement period, protections]
### Tax Analysis
| Structure Option | Seller After-Tax Proceeds | Buyer NPV of Tax Benefit | Combined Efficiency |
|---|---|---|---|
| ... | | | |
### Key Risks and Mitigants
| Risk | Probability | Impact | Mitigant |
|---|---|---|---|
| ... | | | |
### Indicative Timeline
| Milestone | Target Date |
|---|---|
| LOI / Term sheet | Week [X] |
| Due diligence completion | Week [X] |
| Definitive agreement signed | Week [X] |
| Regulatory filings | Week [X] |
| Closing | Week [X] |
Quality Checks
valuation skill used or referenced for the enterprise-to-equity value bridge and valuation basis.tax-structure-advisory skill referenced for detailed tax structuring analysis where applicable.
1 --- 2 name: deal-structuring 3 description: M&A deal structuring and term sheet design. USE THIS SKILL when the user asks about deal structure, term sheet, purchase agreement terms, asset deal vs. stock deal, earnout, escrow, reps and warranties, indemnification, locked box, completion accounts, consideration mix, seller note, MAC clause, material adverse change, non-compete, conditions precedent, purchase price mechanism, closing conditions, merger agreement, or SPA terms. Also trigger when asked to draft or review M&A transaction terms. 4 --- 5 6 # M&A Deal Structuring & Term Sheet Design 7 8 ## Required Inputs 9 10 - **Transaction Overview**: Buyer, target, deal rationale, and indicative valuation range. 11 - **Buyer Type**: Strategic acquirer or financial sponsor (PE fund). 12 - **Target Entity Type**: C-corp, S-corp, LLC, partnership, or international entity. 13 - **Consideration Budget**: Available cash, appetite for stock issuance, and debt capacity. 14 - **Key Sensitivities**: Seller priorities (cash at close, tax efficiency, retention of upside) and buyer priorities (risk allocation, price protection, integration flexibility). 15 16 ## Execution Steps 17 18 ### 1. Deal Structure Selection 19 20 Choose the legal structure for the transaction. Each has materially different tax, liability, and operational consequences. 21 22 #### Structure Comparison Table 23 24 | Dimension | Asset Purchase | Stock Purchase | Statutory Merger | 25 |---|---|---|---| 26 | **What transfers** | Selected assets and liabilities | Entire legal entity (shares) | Target merges into buyer or sub | 27 | **Successor liability** | Generally no (except specific carve-outs) | Yes — all liabilities transfer | Yes — surviving entity assumes all | 28 | **Tax to seller (C-corp)** | Double tax (corporate + shareholder) | Single tax at shareholder level | Single tax (if structured properly) | 29 | **Tax to seller (S-corp/LLC)** | Single tax at owner level | Single tax at owner level | Single tax at owner level | 30 | **Buyer tax benefit** | Step-up in asset basis (higher future D&A) | No step-up (unless 338(h)(10) election) | No step-up (unless 338(h)(10)) | 31 | **Contract assignment** | Requires consent per contract | Automatic (unless change-of-control clause) | Automatic by operation of law | 32 | **Employee transfer** | New employment offers required | Employees remain with entity | Employees remain with surviving entity | 33 | **Third-party consents** | Extensive (each asset/contract) | Limited (change-of-control only) | Limited | 34 | **Minority shareholders** | N/A | Must acquire 100% or deal with holdouts | Squeeze-out via appraisal rights | 35 | **Regulatory complexity** | Lower | Moderate | Higher (board + shareholder approvals) | 36 | **Best for** | Buying specific divisions; avoiding liabilities | Clean companies; speed to close | Public targets; tax-efficient combinations | 37 38 #### Decision Framework 39 40 Score each factor 1-5 based on deal circumstances: 41 42 | Factor | Favors Asset Deal | Favors Stock Deal | Favors Merger | Score | 43 |---|---|---|---|---| 44 | Buyer wants tax step-up | 5 | 1 | 1 | | 45 | Seller wants single tax layer | 1 | 5 | 5 | | 46 | Significant contingent liabilities | 5 | 1 | 1 | | 47 | Many non-assignable contracts | 1 | 5 | 5 | | 48 | Target has valuable NOLs | 1 | 4 | 4 | | 49 | Minority shareholder squeeze-out needed | 1 | 1 | 5 | | 50 | Partial acquisition (division/unit) | 5 | 1 | 1 | | 51 | Speed to close priority | 2 | 4 | 3 | | 52 | **Total** | | | | | 53 54 Recommend the structure with the highest total score. Document trade-offs for the runner-up. 55 56 ### 2. Consideration Design 57 58 #### Consideration Types 59 60 | Type | Description | Seller Impact | Buyer Impact | 61 |---|---|---|---| 62 | **Cash** | Immediate payment at close | Certainty; immediate tax event | Cash outflow; possibly debt-funded | 63 | **Stock** | Buyer equity issued to seller | Tax deferral possible (tax-free reorg); retains upside | No cash outflow; dilution to existing shareholders | 64 | **Earnout** | Contingent payments tied to future performance | Bridges valuation gap; deferred and uncertain | Reduces upfront risk; creates alignment incentives | 65 | **Seller note** | Deferred cash payment (promissory note) | Installment sale tax treatment; credit risk on buyer | Reduces upfront cash; cheaper than bank debt | 66 | **Rollover equity** | Seller reinvests portion into buyer/NewCo | Tax deferral on rolled amount; ongoing participation | Reduces cash need; aligns seller post-close | 67 68 #### Consideration Mix Design 69 70 State the proposed mix as a table: 71 72 | Component | Amount ($M) | % of Total | Key Terms | 73 |---|---|---|---| 74 | Cash at close | | | Funded by [source] | 75 | Stock consideration | | | Exchange ratio: [X] buyer shares per target share; collar/fixed | 76 | Earnout | | | Metric: [revenue/EBITDA]; Period: [X] years; Cap: $[X]M | 77 | Seller note | | | Term: [X] years; Interest: [X]%; Subordination: [senior/sub] | 78 | Rollover equity | | | [X]% of seller proceeds rolled into NewCo | 79 | Escrow/holdback | | | [X]% held for [X] months for indemnification | 80 | **Total consideration** | | 100% | | 81 82 ### 3. Purchase Price Mechanism 83 84 Choose between the two standard approaches: 85 86 | Dimension | Locked Box | Completion Accounts | 87 |---|---|---| 88 | **Reference date** | Pre-signing balance sheet date | Closing date balance sheet | 89 | **Price certainty** | Fixed at signing (seller-friendly) | Adjusted post-closing (buyer-friendly) | 90 | **Leakage protection** | Seller covenants against value extraction post-locked-box date | N/A — price adjusts to actual | 91 | **Working capital** | Included in locked-box price | True-up to agreed target NWC | 92 | **Cash / debt** | Fixed at locked-box date | Adjusted to actual at close | 93 | **Dispute risk** | Low (price is fixed) | Higher (completion accounts disputed) | 94 | **Best for** | Competitive auctions; clean businesses | Volatile working capital; buyer-friendly deals | 95 96 If using **completion accounts**, define: 97 98 | Adjustment | Target / Peg | Mechanism | 99 |---|---|---| 100 | Net working capital | $___M (based on trailing [X]-month average) | Dollar-for-dollar adjustment above/below target | 101 | Net debt | $0 (cash-free / debt-free basis) | Deducted from headline price | 102 | Cash | $0 (cash-free / debt-free basis) | Added to headline price | 103 | Transaction expenses | $0 | Deducted from headline price | 104 | CapEx true-up | $___M minimum spend | Shortfall deducted from price | 105 106 ### 4. Key Deal Terms 107 108 #### 4a. Representations and Warranties 109 110 | Category | Seller Reps (typical) | Buyer Reps (typical) | 111 |---|---|---| 112 | **Fundamental** | Authority, organization, capitalization, title to shares | Authority, organization | 113 | **Financial** | Accuracy of financial statements, no undisclosed liabilities | Solvency, available funds | 114 | **Operational** | Material contracts, compliance with laws, litigation, IP, employees, tax, environmental, insurance | — | 115 | **Bring-down** | All reps true at signing and closing | All reps true at signing and closing | 116 117 **Survival periods**: Fundamental reps (indefinite or 5-7 years); General reps (12-24 months); Tax reps (statute of limitations + 60 days); Environmental (3-6 years). 118 119 #### 4b. Indemnification 120 121 | Parameter | Market Range | Recommendation | 122 |---|---|---| 123 | **Cap (general)** | 10-20% of enterprise value | [X]% based on risk profile | 124 | **Cap (fundamental/fraud)** | 100% of purchase price | Full recourse | 125 | **Basket (deductible)** | 0.5-1.5% of EV | [X]% — tipping vs. true deductible | 126 | **Mini-basket (de minimis)** | $[X]K per claim threshold | Exclude trivial claims | 127 | **Escrow amount** | 5-15% of purchase price | $[X]M held for [X] months | 128 | **Escrow release** | 12-24 months post-close | [X] months, partial release at [X] months | 129 | **R&W insurance** | Increasingly common; 2-4% premium | Buy-side policy recommended if > $[X]M EV | 130 131 #### 4c. Material Adverse Change (MAC) Clause 132 133 Define what constitutes a MAC allowing the buyer to terminate: 134 135 | Included in MAC Definition | Carved Out (NOT a MAC) | 136 |---|---| 137 | Material decline in target's business, operations, financial condition | General economic or industry-wide changes | 138 | Loss of key customers representing > [X]% revenue | Changes in law or accounting standards | 139 | Regulatory action materially impairing operations | Effects of the announced transaction itself | 140 | Material breach of reps or covenants | Pandemics, natural disasters (negotiate) | 141 | | Changes in financial markets generally | 142 143 **Materiality qualifier**: MAC must be material to the target's business "taken as a whole" and must be "durable" (not temporary). 144 145 #### 4d. Additional Key Terms 146 147 | Term | Description | Market Standard | 148 |---|---|---| 149 | **Non-compete** | Seller restricted from competing post-close | 2-4 years; defined geography and scope | 150 | **Non-solicit** | Seller cannot recruit target employees | 2-3 years; covers employees and customers | 151 | **Conditions precedent** | Required before closing | Regulatory approvals, third-party consents, financing condition (PE only), no MAC | 152 | **Interim operating covenants** | Seller runs business in ordinary course between sign and close | Defined positive and negative covenants; materiality thresholds | 153 | **Termination rights** | Circumstances allowing either party to walk | Longstop date, regulatory failure, uncured breach, board fiduciary out | 154 | **Break fee / reverse break fee** | Penalty for termination | 2-4% of EV (target break fee); 3-6% (reverse break fee for financing failure) | 155 | **Go-shop / no-shop** | Post-signing solicitation rights | No-shop standard; go-shop in PE deals (20-40 days) | 156 157 ### 5. Earnout Design (if applicable) 158 159 Earnouts require careful design to avoid disputes: 160 161 | Design Element | Recommendation | 162 |---|---| 163 | **Metric** | Revenue (harder to manipulate) preferred over EBITDA (subject to cost allocation) | 164 | **Measurement period** | 1-3 years; annual measurements with interim payments | 165 | **Targets** | Tiered: threshold (floor), target (midpoint), stretch (cap) | 166 | **Accounting treatment** | Specify GAAP/IFRS basis; define permitted and excluded adjustments | 167 | **Operational covenants** | Buyer commits to operate business in manner consistent with earnout achievement | 168 | **Dispute resolution** | Independent accountant for calculation disputes; arbitration for covenant disputes | 169 | **Acceleration** | Full earnout payable if buyer materially changes business or sells target | 170 | **Cap** | Maximum total earnout payment = $[X]M | 171 172 ### 6. Tax Implications Summary 173 174 | Structure | Seller Tax Treatment | Buyer Tax Treatment | Key Consideration | 175 |---|---|---|---| 176 | Cash asset purchase | Ordinary income on recaptured depreciation; capital gain on goodwill | Step-up in basis; amortize goodwill over 15 years (Section 197) | Best buyer tax outcome; worst seller tax outcome (C-corp double tax) | 177 | Cash stock purchase | Capital gains on share sale | No step-up; carryover basis | Clean for seller; suboptimal for buyer | 178 | Stock purchase + 338(h)(10) | Treated as asset sale for tax | Step-up in basis (same as asset deal) | Requires both parties' agreement; only for S-corps and subs | 179 | Tax-free reorganization (stock-for-stock) | Tax deferred on stock received | Carryover basis in target assets | Requires continuity of interest (>40% stock); no step-up | 180 | Installment sale (seller note) | Gain recognized as payments received | Interest deductible | Seller defers tax; must meet installment sale rules | 181 182 Recommend structure based on combined tax efficiency. Model the after-tax proceeds to the seller under each alternative. 183 184 ## Output Template 185 186 ```markdown 187 ## Deal Structure: [Buyer] Acquisition of [Target] 188 189 **Date**: [Date] | **Indicative EV**: $[X]M | **Structure**: [Asset/Stock/Merger] 190 191 ### Transaction Summary 192 | Item | Detail | 193 |---|---| 194 | Buyer | [Name and type] | 195 | Target | [Name, entity type, jurisdiction] | 196 | Enterprise value | $[X]M | 197 | Equity value | $[X]M | 198 | Structure | [Asset purchase / Stock purchase / Merger] | 199 | Consideration | [Cash/Stock/Mixed — summary] | 200 201 ### Structure Rationale 202 [Why this structure was selected over alternatives, with reference to scoring] 203 204 ### Consideration Mix 205 | Component | Amount ($M) | % of Total | Key Terms | 206 |---|---|---|---| 207 | ... | | | | 208 209 ### Purchase Price Mechanism 210 [Locked box or completion accounts with adjustment mechanics] 211 212 ### Key Terms Summary 213 214 #### Representations and Warranties 215 [Summary of scope and survival periods] 216 217 #### Indemnification 218 [Cap, basket, escrow, R&W insurance recommendation] 219 220 #### MAC Clause 221 [Definition and carve-outs] 222 223 #### Restrictive Covenants 224 [Non-compete, non-solicit scope and duration] 225 226 #### Conditions Precedent 227 [Required approvals and conditions for closing] 228 229 #### Termination Rights 230 [Break fees and termination triggers] 231 232 ### Earnout Structure (if applicable) 233 [Metric, targets, measurement period, protections] 234 235 ### Tax Analysis 236 | Structure Option | Seller After-Tax Proceeds | Buyer NPV of Tax Benefit | Combined Efficiency | 237 |---|---|---|---| 238 | ... | | | | 239 240 ### Key Risks and Mitigants 241 | Risk | Probability | Impact | Mitigant | 242 |---|---|---|---| 243 | ... | | | | 244 245 ### Indicative Timeline 246 | Milestone | Target Date | 247 |---|---| 248 | LOI / Term sheet | Week [X] | 249 | Due diligence completion | Week [X] | 250 | Definitive agreement signed | Week [X] | 251 | Regulatory filings | Week [X] | 252 | Closing | Week [X] | 253 ``` 254 255 ## Quality Checks 256 257 - [ ] Deal structure (asset/stock/merger) explicitly selected with documented rationale using the scoring framework. 258 - [ ] Tax implications modeled for both buyer and seller under the chosen structure and at least one alternative. 259 - [ ] Consideration mix fully specified with dollar amounts, percentages, and key terms for every component. 260 - [ ] Purchase price mechanism (locked box or completion accounts) defined with specific adjustment items and targets. 261 - [ ] Reps and warranties categorized (fundamental, financial, operational) with survival periods stated. 262 - [ ] Indemnification terms specified: cap, basket, de minimis, escrow amount, and escrow duration. 263 - [ ] MAC clause defined with both inclusions and carve-outs explicitly listed. 264 - [ ] Earnout (if included) has a defined metric, measurement period, tiered targets, operational covenants, dispute resolution, and cap. 265 - [ ] Non-compete and non-solicit have specific duration and scope (not left as "to be agreed"). 266 - [ ] Conditions precedent enumerated, including regulatory approvals, consents, and financing conditions. 267 - [ ] Cross-reference: `valuation` skill used or referenced for the enterprise-to-equity value bridge and valuation basis. 268 - [ ] Cross-reference: `tax-structure-advisory` skill referenced for detailed tax structuring analysis where applicable.
Kaakati