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What does a purchase agreement entail?

Whether purchasing shares or assets, the key component of a transaction is the purchase agreement which can be accompanied, as needed, by complementary agreements that protect the interests of both the buyer or the seller. Whether the acquisition involves shares or assets, a purchase agreement will state the number and category of shares sold or a description of the assets sold. In both cases, the parties will have to agree on the acquisition price, the terms of payment, the warranties in case of a balance of sale, and the representations and warranties required by the seller. When a buyer acquires shares, particular attention must be paid regarding the corporation’s financial situation because by acquiring these shares, the buyer is liable for all the corporation’s obligations; he “inherits” its past. When acquiring assets, the focus is primarily on the condition of the assets being purchased.

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