Firm Gains > Indemnities

What Does Indemnities Mean?

Indemnities are contractual provisions aimed at protecting both the buyer and the seller against post-transaction risks. Indemnities cover damages, costs and losses for which the seller is liable. For example, any third party claims, environmental claims and liabilities (such as accounts payable, taxes and litigation) that arise and are associated with issues that existed before completion of the sale.

Both the buyer and the seller are somewhat protected and assured regarding any arising adverse occurrences and/or discoveries related to and pre-dating the sale.

Indemnities give the buyer greater confidence against any unpleasant surprises (emerging liabilities) pre-dating, but arising after completing the sale. Buyers seek well thought out indemnities written into the sale agreement as some level of protection against such liabilities.

With indemnities negotiated and agreed with the buyer, and written into the sale agreement, what the seller could be liable for is well documented and thus protecting against arising liabilities not covered in the indemnities.

Just like many other aspects of the business sale process, indemnities are subject to negotiation. For the seller, offering more, helpful seller indemnities would give the buyer greater assurance about the sale and could help increase the valuation and sale price. However, much caution needs to be exercised as to the quantum and extent of indemnities offered so as to limit liabilities one could bear in the event of breaches.

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I found it much easier to get my head around a business sale this way than talking to my accountant. You speak a language I understand!

Even though the whole process of selling seems daunting, I’ve got more confidence that I’m heading in the right direction.

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Health Clinic

Thank you for your email and the excellent advice provided earlier this week. It was immensely helpful and has helped me to plan my future direction for the practice.

I would have no problem whatsoever in recommending your services in the future.

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Dental Practice

Firm Gains were recommended to me and I was not disappointed. They were efficient, helpful and effective responding quickly to my request with all the facts that were needed to ensure a stress-free dialogue with our buyer.

What really helped was the advice over and above the valuation, which was immensely valuable and gave me the confidence to proceed. I would not hesitate in recommending them.

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High Ticket Tourism Company

We found the advice invaluable, which was clear and concise and felt your firm had a good handle on market trends and business sectors.

With also the backup of the secondary services, there was a feeling you had all bases covered if we wanted to proceed with our exit via Management Buy Out (‘MBO’).

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IT Services

Thank you for your advice. I was just about to sign up to the wrong kind of business agent for a company of our size, but read your post just in time.

I found a more serious partner, with experience in our industry and we’re already using the same language.

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We have been greatly impressed by the clear and impartial advice given to us by Firm Gains. After just an initial phone call we felt much better informed, with a new awareness of the many options available to us.

Firm gains understood our situation quickly and clearly and were anything but ‘pushy’. Refreshing compared to what we’d experienced before.

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What Does Indemnities Mean?

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