Common Contracts
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Key Covenants in Acquisition Agreements (Chart)November 2nd, 2020
In acquisition transactions, the signing of the acquisition agreement and closing do not usually occur on the same date. This is generally due to the fact that there are often conditions that must be satisfied prior to closing, such as obtaining shareholder consent, regulatory approvals and any necessary third party consents. As a result, an acquisition agreement will typically contain pre-closing covenants (1) outlining the seller's obligation to operate and maintain the business and assets during the pre-closing period and (2) facilitating the closing of the transaction. In addition, certain covenants may apply post-closing. Covenants can either be in the affirmative, requiring certain action, or in the negative (restrictive covenants), precluding certain activities.
