Disclosure Schedule

Disclosure Schedules

What Is A Disclosure Schedule

Disclosure schedules are a key part of complex mergers and acquisitions transactions. They are so crucial to M&A transactions that any error in these schedules could lead to litigation. This is because disclosure schedules are documents that provide fact-specific disclosures that support and supplement a seller’s warranties and representations.  

For this reason, sellers and stockholders should prepare disclosure schedules carefully to avoid lawsuits and other risks. For example, a disclosure schedule must list all liabilities because if a liability shows up after the closing, the buyer could sue for damages. 

Some liabilities that are often listed include tax issues, OSHA problems, an employee claim, vendor claim, and more. Talk to an experienced lawyer to help review your disclosure schedules. To learn more about disclosure schedule contact a trusted experienced business law attorney near you.

What Are Disclosure Schedules?

Disclosure Schedule Example

In M&A transactions, the disclosure schedule has to be attached at the end of the agreement. This happens for many transaction agreements such as a merger agreement, stock purchase agreement, and asset purchase agreement.

The disclosure schedule is documented to prove assertions of facts and warranties made by sellers or stockholders. Some of the information included in these documents include:

  • A list of stockholders
  • Outstanding debts 
  • Intellectual property 
  • Employee benefit plans
  • Permits insurance policies 
  • Real property owned or leased
  • The disclosure schedule may also contain details about warranties. 

Disclosure Schedule Preparation Tips

Sample Disclosure Schedule

Disclosure ScheduleDisclosure schedules are important in M&A transactions but they are not easy to prepare. To draft disclosure schedules the right way, do the following:

  • Start preparing these documents very early on in the deal. Do not wait until the last minute
  • Sellers must inform their management team about how important and critical the disclosure schedules are
  • Understand that the due diligence process and the disclosure schedules in the purchase agreement are not the same things
  • Ensure you have revised each draft of the disclosure schedule 
  • Work with a lawyer that has experience in mergers and acquisitions.

Mistake People Make When Preparing Disclosure Schedules

Importance Of Disclosure

Some of the mistakes that parties make when preparing disclosure schedules include:

  • Making an incomplete list of material contracts
  • Not satisfactorily describing the material contracts. For example, they may leave out the jurisdiction of incorporation.
  • Failing to update the employee roster such that names of former employees still appear in the roster
  • Presenting incomplete financial statements
  • Making an incomplete list of the software and the information technology used in the company 
  • Missing information about leases such as lease terms, landlord, the title of the lease, date of the lease, and so on
  • Failing to completely disclose intellectual property such as patents, trademark,s and so on
  • Incomplete disclosure about litigation, investigation, and other government proceedings
  • Incomplete disclosure of taxes 

Why You Need A Lawyer

Disclosure Schedule Template

Business transactions are always complex especially when they involve drafting and signing contracts. A lawyer can help identify any error in an agreement and propose remedies to these errors before they cause major problems. A Texas lawyer can not only help you draft and negotiate agreements but also help you draft disclosure schedules to mitigate risks and any liability.

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