Legal Due Diligence

Covenant

A promise to do something or not do something before or after closing. Why it matters: This gives owners a clearer way to understand buyer questions, advisor comments, and negotiation tradeoffs during a sale process.

Also used in Financing and Debt Terms: A lender rule the borrower must follow, such as keeping enough cash flow. Why it matters: This gives owners a clearer way to understand buyer questions, advisor comments, and negotiation tradeoffs during a sale process.

Related terms

Advisor

A professional who helps with the sale, such as a broker, M&A advisor, CPA, attorney, or investment banker. Why it matters: The right advisor can help prepare materials, explain tradeoffs, manage buyers, reduce surprises, and keep the owner from negotiating complex deal terms alone.

Closing

The moment when the sale officially happens and ownership transfers. Why it matters: This term affects what must happen at closing, how money moves, and how final obligations are documented.

Buyer

The person, company, investor, or fund trying to buy the business. Why it matters: Different buyers value different things, so knowing the buyer type helps an owner understand likely questions, risks, financing needs, and negotiation style.

More from Legal Due Diligence

APA Asset Purchase Agreement Assignment Basket Change of Control Consent Definitive Agreement Disclosure Schedule Encumbrance Indemnification Indemnity Cap Lien

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