In which scenario would a buyer need to make Representations and Warranties about its own business?

In a stock-for-stock transaction, the buyer typically needs to make representations and warranties about its own business to assure the seller of the buyer's financial health, operational capabilities, and compliance with relevant laws. These assurances are critical in helping the seller gauge the risks associated with the buyer’s stock as a form of payment.

Representations and warranties provide the seller with confidence that the shares they will receive in exchange for their own are backed by a robust and viable business. This is particularly important in a stock-for-stock transaction because the value of the shares received directly depends on the financial status and future prospects of the buyer. Therefore, if the buyer's representations turn out to be inaccurate, it can impact the value and desirability of the shares that the seller receives.

In contrast, in a cash transaction, the primary focus is on the sale price and cash liquidity rather than the operational aspects of the buyer’s business. Similarly, in a merger of equals, the parties typically engage in mutual disclosures and representations, but the focus would be on both companies rather than the buyer alone. In an asset purchase, the buyer is acquiring specific assets and generally focuses on the seller's representations about those assets rather than its own business.