busted m&a deals headed for litigation - Jackson Walker LLP

seller to represent and covenant that there have been (within the past five years, for example)
and will be (prior to the closing) no voluntary changes in the seller’s accounting practices.
For a further discussion of these issues, see the comment to Section 3.4.
Although GAAP is the standard used in the preparation of nearly all financial
statements, the SEC reserves the right to mandate specific accounting methods for public
companies. When dealing with financial statements of public companies, the Buyer may
want to amend the definition of GAAP to include compliance with SEC accounting
standards.
In international transactions, the parties should be aware that there are important
differences between the GAAP standards and accounting standards used in other nations.
The buyer sometimes requires that foreign financial statements be restated to conform to
United States GAAP or accompanied by a reconciliation to United States GAAP.
“Governing Documents” -- with respect to any particular entity, (a) if a corporation, the
articles or certificate of incorporation and the bylaws; (b) if a general partnership, the partnership
agreement and any statement of partnership; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a limited liability company, the articles of
organization and operating agreement; (e) any other charter or similar document adopted or filed in
connection with the creation, formation or organization of a Person; (f) all equityholders’
agreements, voting agreements, voting trust agreements, joint venture agreements, registration rights
agreements or other agreements or documents relating to the organization, management or operation
of any Person, or relating to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.
“Governmental Authorization” -- any Consent, license, or permit issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
“Governmental Body” -- any:
(a)
(b)
nation, state, county, city, town, borough, village, district, or other jurisdiction;
federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any agency,
branch, department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers);
(d)
multi-national organization or body;
(e) body exercising, or entitled or purporting to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power; or
(f)
official of any of the foregoing.
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