• Caps and Baskets in Private Acquisitions: What’s Market Q1 - Q3 2011?
  • January 18, 2012 | Authors: Jennifer M. Becker; Lisa Hedrick
  • Law Firm: Hirschler Fleischer A Professional Corporation - Richmond Office
  • Sellers generally attempt to limit their liability under a purchase agreement by imposing caps, baskets and minibaskets on their indemnification obligations for breaches of representations, warranties and covenants. Caps, generally subject to certain carve outs, provide a ceiling on a seller’s liability to the buyer. Baskets and mini-baskets, on the other hand, are threshold limitations on whether a seller has liability to the buyer. Here is a snapshot of what was market for sellers in the 153 mergers and acquisitions that closed in the first three quarters of 2011.