What are Brokers? In this section, the Seller provides information regarding relationships it has with business brokers and other third-party transaction advisors. It is part of the Representations and Warranties of the Seller section.

The Representations and Warranties of Seller portion of the Agreement is used to save the Buyer time and money. Rather than require the Buyer to go through third parties to find certain information, the Seller provides the information and must reimburse the Buyer for any Losses it suffers if the information is false or misleading.

The Middle Ground: The Seller represents that no intermediaries are entitled to any brokerage fee or commission in connection with the acquisition, except for the intermediaries listed in the Agreement.

Purpose: This provision serves a small risk management function by assuring the Buyer that if a third party claims a right to some portion of the Purchase Price based on an agreement with the Seller, it will be the Seller’s responsibility to resolve the claim. The Buyer makes a reciprocal representation, meaning both sides bear some of the risk of third-party claims.

Buyer Preference: Even with this representation included, if the broker’s fee is not paid by the Seller such nonpayment can result in a lien on the Business, which will undoubtedly cause headaches for the Buyer. To avoid such a situation, in addition to including this representation, the Buyer will require a post-Closing statement from the broker indicating that its fee has been paid in full.

Seller Preference: None.

Differences in a Stock Sale Transaction Structure: None.