Agreements and Licenses
USINFO | 2014-01-02 13:39

 
Agreements and licenses that are material to the success of a business may be jeopardized by an acquisition. For example, following the foreign acquisition of Firestone, General Motors announced that it would no longer purchase tires from Firestone as original equipment on its automobiles. An acquisition agreement typically will require disclosure of any contract above a certain size or extending beyond a certain duration, to alert the buyer of the commitments to which the business is subject and advise the buyer of the consents that must be obtained to assume such agreements or leases. The other party to such contracts or leases may be reluctant to consent to assignment without compensation if, for example, the rent or other compensation is below market. Thus, the acquisition agreement may contain additional representations regarding assignability and a lack of knowledge by the seller that any material business will be lost solely as a result of the acquisition.
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