Learn essential drafting considerations to avoid post-closing issues. Areas of consideration covered in this detailed checklist include purchase agreements, earnouts, cap tables, paying agent items, escrow, and other vital post-closing matters.

A sampling of the checklist is included below:


Working Capital

  • Watch for non-accounting issues in working capital (e.g., tax compliance, reserves for litigation, capitalization). These require legal analysis to resolve. Accounting arbitrators only know how to address accounting issues.
  • Watch for overlap in definitions, circular definitions, or reference to documents outside the four corners of the agreement.
  • Ask the Shareholder Representative to review draft language (they will be the ones who need to implement/enforce it).

Shareholder Liability

  • Review the limit of shareholder liability deriving from post-closing matters, including joint and/or several liability, whether there are caps on liability in the absence of fraud, and the order of liability (i.e., who pays for what, and in what order?)

Baskets and Caps

  • Review the language around baskets (e.g., overbroad exclusions, does it allow for potential damages?).

Post-Closing Dispute Mechanics

  • Ensure at least a 30-day response period for claims and ability to control third-party claims.
  • If possible, be sure that if the Sellers have the right to control third-party disputes, they can do so without having to admit indemnification.
  • Require that the Shareholder Representative must provide written consent to any settlement as a condition to indemnifications.
  • Require that a claim notice be sufficiently specific to identify a claim. This prevents “claim creep” where the Buyer may start articulating new theories after the survival period has ended.
  • Determine if a cap on specifically indemnified matters is appropriate.
  • Watch for damage calculations based on diminution of value. This kind of provision could inflate claims by the multiple calculated for the deal valuation. That can make damages nearly impossible to agree upon for purposes of claim resolution.


  • Review assignment provisions, particularly if a shareholder is a late-stage fund that may be winding-up during the active post-closing period. Ensure that the fund could easily assign interest in post-closing economics (escrows, milestones, expense funds) if the fund needs to wind-down before all potential distributions have been made.


  • Expressly address ownership of the selling company’s attorney-client privilege*.
  • Include pre-emptive conflict waiver so that seller’s counsel can continue to represent the shareholders.

To download the full checklist, please complete the form below.

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