Unlike in a public company acquisition, where the target's representations die at the closing, in a private company acquisition, the representations survive the closing and provide the basis for the buyer's post-closing indemnification remedy.
Both sides in a transaction heavily negotiate how long the buyer may assert post-closing indemnification claims for breaches of these representations. Most practitioners insert verbiage into the agreement specifying how long the sellers' representations "survive." They intend to establish a contractual statute of limitations for bringing post-closing indemnification claims. But the court in the Western Filter decision, which is a Ninth Circuit decision, held that language to be ambiguous.
Use "The parties, intending to contractually shorten the applicable statute of limitations, agree that the target company's representations will expire on the [first] anniversary of the closing date and that all liabilities of the sellers, and all remedies exercisable by the buyer, with respect to those representations will terminate on that anniversary."
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