Editing Mergers and acquisitions (section)

==Documentation==
The documentation of an M&A transaction often begins with a [[letter of intent]]. The letter of intent generally does not bind the parties to commit to a transaction, but may bind the parties to confidentiality and exclusivity obligations so that the transaction can be considered through a [[due diligence]] process involving lawyers, accountants, tax advisors, and other professionals, as well as business people from both sides.<ref name=mckenna>{{cite web|title=Mergers & Acquisitions Quick Reference Guide|url=http://www.mckennalong.com/media/site_files/1634_MLA%20M_A%20Quick%20Reference%20Guide.pdf|publisher=McKenna Long & Aldridge LLP|access-date=19 August 2013|archive-url=https://web.archive.org/web/20120303072807/http://www.mckennalong.com/media/site_files/1634_MLA%20M_A%20Quick%20Reference%20Guide.pdf|archive-date=3 March 2012|url-status=dead}}</ref>

After due diligence is complete, the parties may proceed to draw up a definitive agreement, known as a "merger agreement", "share purchase agreement," or "asset purchase agreement" depending on the structure of the transaction. Such contracts are typically 80 to 100 pages long and focus on five key types of terms:<ref>{{cite web|last=Barusch|first=Ronald|title=WSJ M&A 101: A Guide to Merger Agreements|url=https://blogs.wsj.com/deals/2010/11/09/wsj-ma-101-a-guide-to-merger-agreements/|publisher=WSJ Deal Journal|access-date=19 August 2013|date=2010-11-09}}</ref>
*Conditions, which must be satisfied before there is an obligation to complete the transaction. Conditions typically include matters such as regulatory approvals and the lack of any [[material adverse change]] in the target's business.
*[[Contract#Representations versus warranties|Representations and warranties]] by the seller with regard to the company, which are claimed to be true at both the time of signing and the time of closing. Sellers often attempt to craft their representations and warranties with knowledge qualifiers, dictating the level of knowledge applicable and which seller parties' knowledge is relevant. Some agreements provide that if the representations and warranties by the seller prove to be false, the buyer may claim a refund of part of the purchase price, as is common in transactions involving privately held companies (although in most acquisition agreements involving public company targets, the representations and warranties of the seller do not survive the closing). Representations regarding a target company's net working capital are a common source of post-closing disputes.
*[[covenant (law)|Covenant]]s, which govern the conduct of the parties, both before the closing (such as covenants that restrict the operations of the business between signing and closing) and after the closing (such as covenants regarding future income tax filings and tax liability or post-closing restrictions agreed to by the buyer and seller parties).
*Termination rights, which may be triggered by a breach of contract, a failure to satisfy certain conditions or the passage of a certain period of time without consummating the transaction, and fees and damages payable in case of a termination for certain events (also known as breakup fees). 
*Provisions relating to obtaining required shareholder approvals under state law and related SEC filings required under federal law, if applicable, and terms related to the mechanics of the legal transactions to be consummated at closing (such as the determination and allocation of the purchase price) and post-closing adjustments (such as adjustments after the final determination of working capital at closing or earnout payments payable to the sellers), repayment of outstanding debt, and the treatment of outstanding shares, options and other equity interests).
*An indemnification provision, which provides that an indemnitor will indemnify, defend, and hold harmless the indemnitee(s) for losses incurred by the indemnitees as a result of the indemnitor's breach of its contractual obligations in the purchase agreement
Following the closing of a deal, adjustments may be made to some of the provisions outlined in the purchase agreement, such as the purchase price. These adjustments are subject to enforceability issues in certain situations. Alternatively, certain transactions use the 'locked box' approach, where the purchase price is fixed at signing and based on the seller's equity value at a pre-signing date and an interest charge.