Kirkland M&A Update Kirkland & Ellis LLP

An Unexpected Intersection of Deal-Related Indemnification and D&O Advancement

Purchase agreements in many private company transactions contain some form of two seemingly unrelated provisions: (1) an agreement by the sellers to indemnify the buyer for certain losses arising out of breaches of representations and warranties made by the sellers and (2) an agreement by the buyer to maintain or assume the rights of former directors and officers of the target contained in the target’s organizational documents to indemnification and advancement of expenses for actions taken prior to closing.