One common mistake made in mergers and acquisitions is not having an inclusive or effective disclosure statement. This can lead to many problems including an increased risk in the transaction and liability issues for all parties involved. In some acquisition agreements, incomplete or inaccurate disclosure schedules can lead to the deal falling through. The sooner you start building this schedule, the less stressful and more complete it will be, especially if you include key personnel in the process.

What a Disclosure Schedule Includes

By definition, a disclosure schedule is a document listing important company information such as contracts and liabilities, employee information and intellectual property as outlined in acquisition agreements. Anything that affects the company in a legal or financial way is typically included so that those making the acquisition can weigh all the facts and any considerations can be prepared for and addressed.

How They Affect Mergers

Mergers and acquisitions are business deals in which two companies become one legal entity. A merger is when two separate companies cease to exist, and a new legal entity is created from them; an acquisition takes place when one company is purchased by another and absorbed into it. The company remaining after these deals is responsible for the liabilities and contracts each business had before the merger, which means that a buyer will need to know what the seller has outstanding before the purchase. When disclosure schedules are complete and correct, the purchasing entity can calculate any liabilities and outstanding contracts the sellers have as well as what equipment, inventory and employees there are to consider. Incomplete or incorrect schedules can lead to deals falling through or the new entity facing legal challenges unprepared.

How To Make an Effective One

To make an effective disclosure schedule, begin the process as soon as possible. Ideally, you will start the schedule as soon as you decide to merge with another entity. You will also want to include any employees with relevant knowledge and experience in the process such as those who have outstanding contracts or who have developed intellectual property for the company. It is important to consult your attorney and accountant to make sure everything is accurate and complete.

A disclosure schedule is a listing of important information relevant to mergers and acquisitions. Incomplete or inaccurate schedules can increase the risk involved with the deal as well as lead to liability issues, so it is important to start early on building one. Include relevant personnel in the disclosure schedule process for the most accuracy.