SNC Law Becomes Shea Nerland
Shea Nerland has a new name, a new look and a new location. Learn more about our new branding and our updated space in downtown Calgary.Learn More
The indemnification provisions at the back of a typical private company acquisition agreement set out the terms under which a seller will be obligated to indemnify the buyer for losses the buyer may suffer post-closing. The buyer wants the seller to give serious consideration to the seller’s representations, warranties and covenants contained in the acquisition agreement and be on the hook for any faulty disclosures made to the buyer in that agreement. Conversely, the seller wants to have certainty upon the closing of the transaction and does not want to be “at risk” following closing. Therefore, the buyer will want the indemnification provisions to be as broad as possible while the seller will want to limit the scope, duration and aggregate potential liability of such indemnification obligations. Given that these provisions have a significant impact on the allocation of risk of the transaction, and could also have a significant impact on the purchase price, time and attention should be taken by the parties to negotiating and drafting these provisions.