The purpose of reps and warranties is to provide the buyer with assurance that the target company is in good condition and that the buyer is not acquiring any undisclosed liabilities or issues that may negatively impact the company's value. If any of the representations and warranties turn out to be false, the buyer may be entitled to seek damages from the seller.
Read MoreWhy you need an M&A attorney when buying any business…from the perspective of a business broker.
Read MoreWhy Buyers and Sellers negotiate a letter of intent in an M&A transaction
Ten Best Practices
Tips from a Business Broker