Digital Due Diligence
By definition, a Purchase and Sale Agreement (PSA) is a type of legal document that creates an obligation for the buyer to purchase a product or a service, and for the seller to convey the agreed-upon product or service.
Purchase and Sale Agreements are typically used for transactions that involve sizeable commercial assets like real estate property and company stock, or when one business is acquiring another.
Similarly, it can also function as a contract for frequent or revolving purchases, to help suppliers and procurers in forecasting costs and demand over a specific period of time.
Whether you are a buyer or seller, a sound and sensible PSA is crucial to negotiating a sales transaction. It provides the legal framework that delineates all the agreed terms and conditions mutually agreed to by both parties. It also outlines the various rights and obligations of both buyer and seller as provided by federal and state laws.
Most of all, as a contracting party, you want to be assured that the deal is valid, legitimate, and above-board.
When the stakes are high, nothing can be left to chance.
With Veritas Global, your company is assured of focused and personalized service from practitioners committed to getting you the best value from any transaction.
Basic features of purchase and sale agreements
A Purchase and Sale Agreement is a living document that is subject to change as it is likely to be reviewed, revised, and updated until such time the parties concerned and their legal representatives arrive at mutually accepted terms. Only when both parties sign the document to signify their conformity with all terms and conditions does the agreement become final and legally binding.
Thus, a distinct advantage of engaging legal professionals to draw up your PSA is to ensure that every updated version of the document is shared and communicated to all parties concerned in an accurate, timely, and efficient manner.
Furthermore, your lawyers can also assist in performing the necessary due diligence to confirm that the transaction is legitimate and done in good faith, as well as in safeguarding that all contingencies stipulated in the agreement are met so as not to void the contract.
Basic information in a Purchase and Sale Agreement are usually comprised of — but are not limited to — the following:
- Legal names and addresses of parties involved (i.e., buyer and seller)
- Description and location of property
- Agreement to sell and purchase
- Financial terms and type of payment
- Restrictive covenants (e.g., prohibiting the seller from establishing a new competitive business for a specified time and within a specified geographic region so as not to weaken the value of the company being sold)
- Warranties and indemnities
- Conditions precedent
- Completion or closing date, when legal ownership transfers to the buyer
- Post-completion obligations
Depending on the scale and nature of the transaction, the PSA may also require supporting documents like financial records, inventory of assets and liabilities, list of digital properties, licenses, and so on.
We care about the details
While Purchase and Sale Agreements appear to be clear-cut and upfront, they are by no means simple. It is crucial to thoroughly verify and review the minutest detail of every clause on every page, and to ascertain what legal implications are involved.
Any oversight or misunderstanding of legal matters can instigate rifts in the agreement and cause it to fail. For this reason, your PSA is best handled by professionals to safeguard your best interest, whether you are buying or selling.
As your strategic advisor, Veritas Global is committed to sharing our knowledge and expertise in a manner that is coherent, precise, and actionable – educating and empowering you to make well-informed decisions at every turn.
We are here to make sure that your business contracts are customized to your specific requirements and are devoid of any legal impediments or potential risks. We take the time to understand your company’s goals and vision in order to get you the best possible value out of every agreement. We care about the smallest details and make sure they will not get in the way of a smooth and successful transaction.
Whether you are a buyer or a seller, protect your investment by partnering with us.