Simple Merger Agreement Template for Entrepreneurs (All-Cash, Founder-Friendly)

Section 1.1. The Merger

Subject to the terms of this Agreement and applicable law, at the Effective Time, Merger Sub will merge with and into the Company, the separate existence of Merger Sub will cease, and the Company will continue as the surviving corporation and a wholly owned subsidiary of Buyer (the “Surviving Corporation”).

This form assumes a Delaware-style reverse triangular merger because it is familiar, efficient, and often reduces the number of third-party consents. If the transaction is structured as a forward merger, asset purchase, or equity purchase, revise this Agreement accordingly.

Section 1.2. Closing and Effective Time

The closing of the transactions contemplated by this Agreement (the “Closing”) will occur remotely by exchange of signatures and wire confirmations on [DATE], or on such other date as the Parties may agree in writing, promptly after all closing conditions have been satisfied or waived.

At the Closing, the Parties will file a certificate of merger (or equivalent filing) with the Secretary of State of the applicable jurisdiction. The merger will become effective upon that filing or at such later time specified in the filing (the “Effective Time”).

Section 1.3. Effects of the Merger

From and after the Effective Time, all assets, rights, permits, contracts, causes of action, and properties of the Company will remain vested in the Surviving Corporation, and all liabilities and obligations of the Company will remain liabilities and obligations of the Surviving Corporation.

The organizational documents of the Surviving Corporation will be amended as provided in Exhibit A, and the directors and officers of the Surviving Corporation will be the individuals designated by Buyer unless otherwise set forth on a closing schedule.

Section 1.4. Further Assurances

After the Closing, each Party will execute and deliver any additional documents and take any additional actions reasonably necessary to carry out the intent of this Agreement and to vest in the Surviving Corporation the benefits of the transaction.

Section 2.1. Purchase Price

The aggregate merger consideration for all Company Securities will be $[GROSS PURCHASE PRICE] (the “Purchase Price”), on a cash-free, debt-free basis and subject to the adjustments expressly set forth in this Agreement.

If the Parties want a simpler fixed-price deal, delete the working capital true-up and keep the Purchase Price mechanics short. If they want a more market private-company structure, preserve the debt, cash, transaction expense, and working capital adjustments.

Section 2.2. Closing Payment Waterfall

At the Closing, Buyer will pay, or cause the Surviving Corporation to pay, the Purchase Price as follows: (a) first, to the holders of Company indebtedness being paid off at Closing, the amounts due under payoff letters; (b) second, to the Company or its designees, the unpaid transaction expenses set forth on the closing funds flow; (c) third, to the escrow agent, the escrow or holdback amount specified in Section 2.2 of the disclosure schedule; and (d) fourth, the balance (the “Closing Merger Consideration”) to the holders of Company Securities in accordance with the Payment Spreadsheet.

The Parties should attach or circulate a short funds flow at least one Business Day before Closing so the wire mechanics are clean and there is no ambiguity around debt, expenses, escrows, or holder payouts.

Section 2.3. Payment Spreadsheet

Not later than [3] Business Days before the Closing, the Company will deliver to Buyer a spreadsheet certified by the Chief Executive Officer or Chief Financial Officer of the Company (the “Payment Spreadsheet”) showing, as of immediately before the Effective Time: (a) each holder of Company Securities; (b) the number and type of Company Securities held by such holder; (c) the amount payable to such holder at Closing; (d) the amount, if any, to be deposited in escrow or held back on behalf of such holder; and (e) all required tax withholding.

Buyer may rely on the Payment Spreadsheet in making Closing payments absent manifest error. For startup deals, this schedule should expressly address SAFEs, convertible notes, warrants, and side letters so there is a single source of truth for the payout.

Section 2.4. Treatment of Equity Awards and Convertible Instruments

At the Effective Time, each outstanding Company stock option, restricted stock award, restricted stock unit, warrant, SAFE, convertible note, or other convertible or derivative security will be treated as set forth on Schedule 2.4 and the Payment Spreadsheet. In-the-money options and similar awards may be cashed out; out-of-the-money awards may be cancelled without payment to the extent permitted by their governing documents; and convertible instruments should either convert immediately prior to Closing or be repaid, settled, or terminated in accordance with their terms.

This is one of the places where entrepreneur deals go off the rails. The form is intentionally explicit that the cap table must reconcile before signing or, at the latest, well before Closing.

Section 2.5. Post-Closing Adjustment (Optional)

If the Parties are using a working capital adjustment, the Company will deliver an estimated closing statement before Closing, Buyer will prepare a final closing statement within [60] days after Closing, and any dispute will be resolved first by negotiation and then by an independent accounting firm whose decision will be final and binding absent manifest error.

If the Parties are not using a post-closing adjustment, delete this Section and remove references to target working capital, estimated statements, and accounting-firm dispute mechanics elsewhere in the Agreement.

Section 2.6. Dissenting Shares; Withholding; Lost Certificates

Shares that properly exercise appraisal or dissenters’ rights under applicable law will not be converted into the right to receive merger consideration unless and until such rights are withdrawn, lost, or finally resolved. The Surviving Corporation may withhold taxes from any payment to the extent required by law, and any lost certificates or uncertificated interests will be handled through customary affidavit and indemnity procedures.

Section 2.7. Securityholder Representative

If the Company has multiple stockholders or equity holders, the holders receiving the merger consideration should designate a single Securityholder Representative to act on their behalf after Closing with respect to purchase price adjustments, indemnification claims, escrow releases, and similar post-closing matters. The appointment should be binding and irrevocable except as expressly stated in the representative agreement or this Agreement.

Section 3.1. Organization and Authority

The Company and each of its subsidiaries is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation, and has the power and authority to own its assets and conduct its business as presently conducted.

The execution, delivery, and performance of this Agreement by the Company and the consummation of the merger have been duly authorized by all necessary company action, subject only to obtaining the required stockholder approval set forth in Section 5.4.

Section 3.2. Capitalization

Schedule 3.2 sets forth the authorized, issued, and outstanding Company Securities, including common stock, preferred stock, options, warrants, SAFEs, convertible notes, restricted equity, phantom equity, and any other rights to acquire or receive equity or value based on equity. Except as set forth on Schedule 3.2, there are no outstanding preemptive rights, registration rights, voting agreements, redemption rights, or obligations of the Company to issue or repurchase Company Securities.

All outstanding equity of the Company has been duly authorized and validly issued, and all options and similar awards were granted in compliance in all material respects with applicable law, the governing equity plan, and any applicable award agreement.

Section 3.3. Financial Statements; No Undisclosed Liabilities; Absence of Certain Changes

The Company has delivered to Buyer the financial statements described on Schedule 3.3. Those statements fairly present in all material respects the financial condition and results of operations of the Company as of the dates and for the periods presented, subject in the case of interim statements to normal year-end adjustments and the absence of footnotes.

Except as reflected or reserved for in those financial statements, incurred in the ordinary course of business since [BALANCE SHEET DATE], or disclosed on Schedule 3.3, the Company has no material liabilities. Since [BALANCE SHEET DATE], the Company has operated in the ordinary course of business in all material respects and no Material Adverse Effect has occurred.

Section 3.4. Material Contracts, Compliance, and Litigation

Schedule 3.4 identifies the Company’s material contracts, including customer contracts, vendor agreements, leases, loan documents, employment agreements, IP licenses, and any contract that contains exclusivity, change-of-control, non-compete, or most-favored-nation provisions material to the business. Except as set forth on Schedule 3.4, each such material contract is in full force and effect and neither the Company nor, to the Company’s knowledge, any other party is in material breach of such contract.

Except as disclosed on Schedule 3.4, the Company is and has been in material compliance with applicable law, no material government investigation is pending or, to the Company’s knowledge, threatened, and there is no pending or threatened litigation that would reasonably be expected to be material to the Company or the transaction.

Section 3.5. Taxes

The Company and each subsidiary has timely filed all material tax returns required to be filed, timely paid all material taxes due and payable, and properly withheld and remitted all material payroll and similar withholding taxes. There are no material tax liens on the assets of the Company other than liens for current taxes not yet due and payable.

No material audit, examination, or administrative or judicial proceeding relating to taxes is pending or, to the Company’s knowledge, threatened, except as set forth on Schedule 3.5.

Section 3.6. Intellectual Property, Data, and Technology

The Company owns or has valid rights to use all material intellectual property necessary to operate the business as currently conducted. To the Company’s knowledge, the operation of the business does not materially infringe, misappropriate, or otherwise violate the intellectual property rights of any third party, and no third party is materially infringing the Company’s owned intellectual property.

The Company has taken commercially reasonable steps to protect its confidential information, source code, trade secrets, and personal data, and has implemented commercially reasonable data security measures appropriate for its size and business. Schedule 3.6 should address open-source software, inbound and outbound IP assignments, contractor invention assignments, and any known data security incidents.

Section 3.7. Employees and Benefits

Schedule 3.7 lists the Company’s employees, independent contractors, and other service providers who are material to the business, together with base compensation, target bonus, and any change-of-control, severance, retention, or transaction bonus rights. The Company is in material compliance with applicable employment, wage and hour, immigration, and worker classification laws.

Except as set forth on Schedule 3.7, there is no labor strike, union organizing effort, or material employment dispute pending or, to the Company’s knowledge, threatened. All employee benefit plans and compensation arrangements have been administered in all material respects in accordance with their terms and applicable law.

Section 3.8. Assets, Real Property, Brokers, and Full Disclosure

The Company has good and valid title to, or a valid leasehold interest in, all material assets used in the business, free and clear of liens other than permitted liens. Schedule 3.8 identifies all owned and leased real property and any broker or finder entitled to fees from the Company in connection with the transaction.

No representation or warranty of the Company contained in this Agreement contains an untrue statement of material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances in which made, not misleading.

Section 4.1. Organization and Authority

Buyer and Merger Sub are duly organized, validly existing, and in good standing under the laws of their jurisdictions of formation, and each has the power and authority to enter into this Agreement and perform its obligations hereunder. This Agreement has been duly authorized, executed, and delivered by Buyer and Merger Sub and is binding on each of them, subject to customary bankruptcy and equitable limitations.

Section 4.2. Funds

Buyer has, and at the Closing will have, sufficient cash on hand or committed financing available to pay the Purchase Price and all related fees and expenses required to be paid by Buyer at Closing. If the Parties intend for financing to be a closing condition, the financing commitment and related cooperation covenant should be added expressly; otherwise Buyer should bear financing risk.

Section 4.3. No Conflicts; Consents

The execution, delivery, and performance of this Agreement by Buyer and Merger Sub do not conflict with their organizational documents or any material contract binding on Buyer or Merger Sub, except for conflicts that would not reasonably be expected to prevent or materially delay the Closing. No consent of any governmental authority is required by Buyer in connection with the transaction, other than consents under applicable merger control or similar laws and other routine filings listed on Schedule 4.3.

Section 4.4. Litigation

There is no pending or, to Buyer’s knowledge, threatened litigation or order against Buyer or Merger Sub that would reasonably be expected to prevent or materially delay Buyer’s ability to consummate the transaction.

Section 4.5. Brokers

Except as set forth on Schedule 4.5, no broker, finder, or investment banker is entitled to any fee or commission from the Company or the Securityholders as a result of the transaction based on any arrangement made by or on behalf of Buyer or Merger Sub.

Section 5.1. Ordinary Course; Restricted Actions

From the date of this Agreement until the earlier of Closing or termination, the Company will operate the business in the ordinary course in all material respects and use commercially reasonable efforts to preserve its relationships with customers, suppliers, employees, and other business partners.

Without Buyer’s prior written consent (not to be unreasonably withheld, conditioned, or delayed), the Company will not take any of the following actions outside the ordinary course: issue equity, incur new debt, declare dividends, make material acquisitions or dispositions, enter into or amend material contracts, make material compensation changes, settle material litigation, or adopt a new employee benefit plan, except as expressly contemplated by this Agreement or disclosed on Schedule 5.1.

Section 5.2. Access and Information

Until Closing, the Company will provide Buyer and its representatives with reasonable access during normal business hours to the Company’s books, records, contracts, and personnel for purposes of finalizing the transaction, planning integration, and preparing post-closing matters, in each case subject to customary confidentiality, privilege, and antitrust limitations.

The Parties should be careful not to give Buyer operational control before Closing. Information sharing and integration planning should be tailored to avoid “gun-jumping” issues, especially when the Parties are competitors.

Section 5.3. Efforts; Regulatory and Third-Party Approvals

Each Party will use commercially reasonable efforts to obtain all required governmental approvals and third-party consents necessary to consummate the transaction. The Company will cooperate with Buyer in obtaining payoff letters, estoppels, contract consents, and other closing deliverables, and Buyer will bear [all / the agreed portion of] filing fees under merger control laws unless otherwise stated.

Section 5.4. Stockholder Approval and Written Consents

The Company will take all action reasonably necessary to obtain the approval of its stockholders required by its organizational documents and applicable law, whether by written consent or meeting. Any required support agreements or joinders from key stockholders should be signed at or promptly after signing this Agreement if the Parties want high deal certainty.

Section 5.5. Exclusivity / No-Shop (Optional)

If the Parties want a definitive no-shop covenant, the Company should agree that from signing until Closing or termination it will not solicit, initiate, or knowingly encourage acquisition proposals from third parties, subject to any fiduciary obligations that may apply under the Company’s governing law and organizational structure. This covenant is often appropriate in private deals but should be tailored to the actual sale process and leverage of the Parties.

Section 5.6. Employee Matters

Before Closing, the Company will not promise post-closing employment, severance, retention, or bonus arrangements on Buyer’s behalf without Buyer’s prior written consent. Buyer may, but is not required to, offer employment to some or all Company employees after Closing on terms determined by Buyer, except as expressly set forth in a separate retention or employment schedule.

Section 5.7. Confidentiality and Public Statements

The Parties will continue to comply with any existing confidentiality agreement except to the extent expressly superseded by this Agreement. No press release or public announcement regarding this transaction will be made without the other Party’s prior written consent, except where required by law or stock exchange rules, in which case the disclosing Party will use reasonable efforts to consult in advance.

Section 5.8. Director and Officer Protection

For [six] years after Closing, Buyer will cause the Surviving Corporation to honor the exculpation, indemnification, and advancement rights of the current and former directors and officers of the Company as in effect immediately before Closing, with respect to acts or omissions occurring before Closing. The Parties may also provide for tail D&O insurance coverage if appropriate for the size and risk profile of the deal.

Section 5.9. No Control Before Closing

Nothing in this Agreement gives Buyer the right to control or direct the Company’s operations before the Effective Time. Before Closing, the Company will retain control over its business, subject only to the specific covenants contained in this Agreement.

Section 6.1. Mutual Conditions

Each Party’s obligation to close is conditioned on: (a) receipt of the required stockholder approval; (b) expiration or termination of any required waiting periods under applicable merger control laws; and (c) the absence of any law, order, or injunction that makes the transaction illegal or prohibits the Closing.

Section 6.2. Conditions to Buyer’s Obligation to Close

Buyer’s obligation to close is conditioned on: (a) the accuracy of the Company’s representations and warranties, subject to agreed materiality standards and any bring-down mechanics for fundamental representations; (b) the Company’s performance in all material respects of its pre-closing covenants; (c) no Material Adverse Effect having occurred; and (d) delivery of the closing certificate, Payment Spreadsheet, payoff letters, stockholder approval documents, resignations requested by Buyer, and any other closing documents listed on Schedule 6.2.

Section 6.3. Conditions to the Company’s Obligation to Close

The Company’s obligation to close is conditioned on: (a) the accuracy of Buyer’s representations and warranties in all material respects; (b) Buyer’s performance in all material respects of its pre-closing covenants; and (c) Buyer’s delivery of the cash required to close and the other closing deliveries listed on Schedule 6.3.

Section 6.4. No Frustration of Conditions

No Party may rely on the failure of a closing condition to excuse its obligation to close if that Party’s material breach of this Agreement caused such condition to fail.

Section 7.1. Survival

The representations and warranties of the Parties will survive the Closing for the periods set forth on Schedule 7.1. A practical entrepreneur-friendly approach is to have general representations survive for [12-18] months, fundamental representations survive for [3-6] years, and tax representations survive until [60] days after the expiration of the applicable statute of limitations.

Section 7.2. Indemnification by Securityholders

Following the Closing, the Securityholders, severally and not jointly except as otherwise provided in the representative agreement or escrow agreement, will indemnify Buyer and its affiliates against losses arising out of: (a) breaches of the Company’s representations and warranties; (b) breaches of pre-closing covenants; (c) any purchase price adjustment owed to Buyer; and (d) matters specifically identified as indemnified items on Schedule 7.2.

Section 7.3. Indemnification by Buyer

Following the Closing, Buyer will indemnify the Securityholders and their representative against losses arising out of Buyer’s breaches of this Agreement and any post-closing covenants assumed by Buyer or the Surviving Corporation.

Section 7.4. Basket, Cap, and Recovery Source

Losses for breaches of general representations may be recoverable only after aggregate losses exceed a deductible or first-dollar basket of $[AMOUNT], and aggregate recovery for such breaches may be capped at [10-15]% of the Purchase Price. Losses for fundamental representations, taxes, fraud, and intentional misconduct are often subject to separate or higher caps, or no cap at all, depending on the negotiated deal risk.

The Parties should also specify whether Buyer’s exclusive source of recovery is an escrow, a holdback, representation and warranty insurance, direct recovery from Securityholders, or some combination of the foregoing.

Section 7.5. Claims Procedure and Securityholder Representative

All post-closing claims should be delivered to the Securityholder Representative, who will control the defense and settlement of third-party claims on behalf of the Securityholders unless the claim is asserted directly against Buyer. The Agreement should include response deadlines, procedures for contested claims, and a clear statement that the representative may bind all Securityholders within the scope of its authority.

Section 7.6. Exclusive Remedy; Fraud Carve-Out

Except for claims seeking injunctive relief or specific performance, and except in the case of fraud or intentional misconduct, the indemnification provisions in this Article should be the Parties’ exclusive remedy after Closing for matters arising from this Agreement. If the seller side wants a strong anti-reliance position, add language making clear that Buyer is not relying on any extra-contractual statements outside the four corners of this Agreement and the schedules.

Section 8.1. Termination Rights

This Agreement may be terminated before Closing by mutual written consent of Buyer and the Company, by either Party if the Closing has not occurred by the Outside Date (so long as the terminating Party’s material breach did not cause the failure to close), by either Party if a final non-appealable order permanently prohibits the transaction, by Buyer for a material uncured breach by the Company, or by the Company for a material uncured breach by Buyer.

Section 8.2. Optional Break Fee or Expense Reimbursement

In many founder-led private deals, there is no break fee at the definitive agreement stage. If the Parties want one, keep it simple and pair it with a narrow trigger, such as a knowing breach of exclusivity or a termination to accept a superior proposal after an agreed process. If there is no break fee, delete any reference to it and let each side bear its own expenses except as otherwise stated in Section 9.10.

Section 8.3. Effect of Termination

If this Agreement is terminated, this Agreement will become void and there will be no liability on the part of any Party except for liabilities arising from a pre-termination breach, the confidentiality and expense provisions that expressly survive, and any other provisions stated to survive termination.

Section 9.1. Notices

All notices under this Agreement must be in writing and will be deemed given when delivered personally, sent by nationally recognized overnight courier, or sent by email to the addresses listed below (with confirmation of transmission), in each case as updated by notice from time to time.

Section 9.2. Governing Law; Forum

This Agreement will be governed by the laws of the State of [DELAWARE], without regard to conflicts of laws principles. The Parties submit to the exclusive jurisdiction of the state and federal courts located in [COUNTY, STATE] for any dispute arising out of this Agreement, and waive any objection based on inconvenient forum.

Section 9.3. Specific Performance

The Parties agree that money damages may not be an adequate remedy for certain breaches of this Agreement and that each Party will be entitled to seek specific performance, injunctive relief, and other equitable remedies in addition to any other available remedies, subject to the terms of this Agreement.

Section 9.4. Entire Agreement; Amendments; Waivers

This Agreement, together with the schedules, exhibits, and ancillary agreements delivered in connection herewith, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior negotiations, letters of intent, and understandings except any confidentiality agreement that expressly survives. Any amendment or waiver must be in writing and signed by the Party against whom enforcement is sought.

Section 9.5. Assignment

No Party may assign this Agreement without the prior written consent of the other Parties, except that Buyer may assign this Agreement to an affiliate so long as Buyer remains liable for its obligations hereunder.

Section 9.6. Third-Party Beneficiaries; Severability

Except as expressly provided in Section 5.8 with respect to directors and officers and in any applicable representative or escrow provisions, this Agreement is for the sole benefit of the Parties and their permitted successors and assigns, and no other person has rights as a third-party beneficiary. If any provision is held invalid or unenforceable, the remaining provisions will remain in full force and effect.

Section 9.7. Counterparts; Electronic Signatures; Expenses

This Agreement may be executed in counterparts, each of which will be deemed an original and all of which together will constitute one instrument. Signatures exchanged by PDF or other electronic means will be treated as originals. Except as otherwise provided in this Agreement, each Party will bear its own fees and expenses in connection with the transaction.