One of the most exciting calls I receive is from a client beginning a merger or acquisition. For starters, it’s challenging but fun work for the attorney. Also, the client is eager to get started in a new field or to add a line of business. The process is paper driven and requires much negotiation and attention to detail. A contract for the purchase and sale of the business is important and may feel like the end of the deal. However, usually it is just one part and there are many other items to accomplish.

There are corporate resolutions for both entities. The assets and contracts must be transferred. Goodwill and intellectual property are significant. Employees and contractors should be accounted for. There is often third-party or seller financing to structure. It all needs to be documented.

The emphasis of this post is common elements I frequently see in mergers and acquisitions. In particular, acquiring a business via asset purchase.

Letter of Intent

This is correspondence that reflects interest by the parties at the start of the deal. It sets forth how due diligence will proceed and outlines any important terms such as price. I like to use a letter of intent style but sometimes a different format like a mutual memorandum of understanding is appropriate. The key for the lawyer is to select whether the letter will be binding or non-binding and draft it that way. Non-binding means the parties can still back out of the deal and is often preferable. Usually, there is still due diligence the purchaser wants to conduct without being obligated if the results are negative. Non-disclosures and agreements not to seek another buyer during due diligence are more likely to be binding in nature.

Asset Purchase Agreement

This can be thought of as a much more comprehensive and binding agreement. It is a roadmap of the deal. An in-depth asset purchase agreement will cover all aspects of the deal and attach many of the closing documents as exhibits. Others can be negotiated later by the merger and acquisition lawyers. It makes clear when and how closing will occur and how the price will be paid. The seller will make a number of covenants, representations, and warranties that the buyer relies on. Upon its signing, lots of terms have been agreed to and the parties agree to negotiate the remainder in good faith.


Most buyers use something other than just cash to purchase. This is good business because it is easier to work with a promise to pay rather than try to recoup cash paid if there is a problem with the deal post closing. The lender will want a promissory note signed. Usually a security interest in certain assets is taken by security agreement. Some lenders will want a guarantee by the individual buyer and spouse.

Employment Agreements

The buyer will want to retain important employees that might include the seller. Employment agreements are put in place. The seller usually agrees not to compete with the business that was just sold.


The buyer and seller entities need various resolutions and other documents showing authority and approval to complete the deal.

Other Documents

The simplest asset purchase transactions involve hundreds of pages of documents. Each one is important because they have bearing on the deal and relations at and after closing. The merger and acquisition attorney’s job is to negotiate the best deal for the client and to ensure the documents work together in one cohesive set.

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