The arrangement of terms and conditions that define how a transaction will be executed, including the financial and legal aspects of the deal. It outlines the roles of the parties involved, the payment methods, and the timeline for the transaction.

Characteristics
– Payment Terms: Specifies how the buyer will pay the seller, which can include cash, stock, or a combination of both.
– Contingencies: Conditions that must be met for the deal to proceed, such as financing approvals or due diligence results.
– Ownership Transfer: Details on how and when ownership of the business will be transferred from the seller to the buyer.
– Liabilities: Clarification on which party is responsible for existing debts or obligations of the business.
– Post-Transaction Roles: Defines any ongoing involvement of the seller after the sale, such as consulting or management roles.

Examples
– In a stock sale, the buyer purchases the shares of the company directly, which may include assuming certain liabilities.
– In an asset sale, the buyer acquires specific assets of the business, such as equipment and inventory, while leaving behind liabilities.
– A seller financing arrangement where the seller agrees to finance a portion of the purchase price, allowing the buyer to pay over time.
– A merger agreement where two companies combine their operations, sharing resources and responsibilities according to the agreed-upon structure.