18 Feb 2025
De-SPAC Clause: No Business Activities Representation
In most deals, buyers and sellers operate active businesses with a variety of assets and liabilities. But occasionally, particularly in transactions involving special purpose acquisition companies (SPACs), a blank-check company is a party to the deal and has no business operations, assets, or liabilities. To ensure the contracting party’s compliance with financial reporting and other regulatory requirements, the blank-check company should represent and warrant that it has no business operations, no workforce, and no liabilities other than contractual liabilities associated with the transaction to which it will be a party and any related financing. Add this “no business activities representation” to the blank-check company’s representations and warranties in the definitive acquisition agreement.
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