Contracts and closing mechanisms support
In mergers and acquisitions transactions, the sale and purchase agreement (SPA) represents the outcome of key commercial, legal and pricing negotiations. Purchasers and sellers are becoming increasingly sophisticated, looking to leverage potential value gained through the negotiation and execution of the SPA.
Our dedicated contracts and closing mechanisms team provides advice at all stages of a transaction, from the price mechanisms and structures before signing to post-closing support and disputes.
Business issues you may face
- You’re making an acquisition as part of a formal auction process and want to make sure your bid stays competitive while providing you with the necessary buy-side contractual protections
- The transaction being contemplated includes a post-closing price-adjustment mechanism, such as a closing-accounts or earn-out mechanism; you’re looking to position the SPA to your advantage and to reduce the opposing party's potential to manipulate the price post-closing
- You’re contemplating the disposal of a business and want to consider the contractual provisions that allow you to have a clean break post-closing, including the “locked-box” or fixed-price mechanism
- You’re making an acquisition and need to ensure potential “debt-like” items and other financial risks have been identified and appropriately addressed, either through a closing-pricing mechanism within the SPA or through the reps and warranties package
We can help
- Advise on the suitability of the price-adjustment mechanism in the SPA (for example, closing-accounts, “locked-box” and deferred-consideration mechanisms)
- Provide arguments for favourable price adjustments to support your negotiations with the other side
- Help you and your legal advisers preserve strong contractual protections in relation to your commercial and negotiated pricing position; this includes definitions of cash, indebtedness, working capital and transaction expenses
- Advise on the suitability of the financial representations, warranties and indemnities in the SPA
- Prepare or review the closing balance sheet and/or working capital statement, including the interpretation of judgmental accounting aspects of the SPA
- Draft or review the dispute notice and provide analyses to support your pricing position, such as an assessment of the strengths and weaknesses of arguments presented
- Prepare written submissions on unresolved issues for determination by an independent expert in the event of a dispute
Contact us
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