Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Basket

Definition

The minimum threshold amount that must be met before a seller becomes liable for the buyer’s losses caused by the seller’s breach of representations and warranties (reps & warranties).

See Also

Indemnification, representations & warranties.

Tips

Baskets and caps limit the amount of the seller’s exposure when indemnifying a buyer under the reps & warranties. Typically, baskets function in one of two ways. Under a “deductible” basket, the seller is liable only for damages in excess of the threshold amount. If the agreement includes a “first dollar” or “tipping” basket, the seller is liable for all damages once the threshold amount has been reached.

Related Resources

M&A Reps & Warranties | A Complete Guide