1. Mergers (or direct mergers) – the objective is transferred to the buyer and takes over all the assets, rights and liabilities of the target entity (the objective then ceases to exist as a separate entity); Legal Due Diligence is part of the due diligence period before the submission of the mandatory offer. It involves a comprehensive review of a company`s external and internal legal relationships. All essential contacts, such as supplier and customer agreements, employment contracts as well as ongoing disputes and litigation, will be subject to a detailed analysis. In the context of a merger or acquisition transaction, asset sales agreements have a number of advantages and disadvantages compared to the use of an equity (or share purchase) or merger agreement. In the event of a capital acquisition or merger, the buyer receives all the assets of the target entity without exception, but automatically assumes all the liabilities of the targeted entity. In addition, a contract for the sale of assets not only allows for the transfer of part of the assets (which is sometimes desired), but also allows the parties to negotiate the commitments of the objective expressly assumed by the buyer and allows the buyer to leave behind liabilities that he does not want to accept (or of which he knows nothing). One of the disadvantages of an asset sale contract is that it can often lead to a greater number of change of control issues. For example, contracts held by a target entity and acquired by a buyer often require the counterparty`s agreement as part of an asset agreement, whereas it is less common for such consent to be required in connection with a share sale or merger agreement. A fiduciary service is an agreement by which a third party (e.g. B a law firm or bank) temporarily holds the assets related to a transaction and is responsible for them until it is concluded to ensure the safety of the parties. In the case of M&A, all or part of the purchase price may be paid to fiduciary interests in order to protect the interests of the parties. Escrow is particularly useful for holdbacks, earn-outs and purchase price adjustments, as well as a compensation fund deposit (if necessary).
Escrow is the subject of a separate agreement and sets out the conditions under which Escrowee may distribute the funds or immovable property it distributes on behalf of the parties. A trust agreement must be carefully and specific to identify the key elements that determine whether to pay or withhold funds in relation to one`s property. Some buyers may only be interested in acquiring exclusive ownership of a business. If the target is made up of several shareholders, some may not want to sell their shares. In this case, moving to the right might be useful. It allows majority shareholders to force the minority shareholder – or “pull” – to also sell their shares. However, this sale must be made under the same (financial) conditions as those proposed to the majority shareholder. Typical exemption obligations of a seller are, among other things, to compensate the buyer for: in order to prevent the seller and management of the target company from affecting the business, a buyer will generally use pre-closed covenants to prohibit the target company, its shareholders, directors and management: as well as all essential contracts that are accepted, such as.B.
Must also be broken down in an APA, since they remain with the selling company, unless they are assigned….