Elke Wollank
German Public Auditor, Certified Tax Advisor, Partner, Deal Advisory
Being in the right and actually winning a law suit are two completely different things
Business purchase agreements are highly complex contracts. The economic interpretation of the agreements can result in significant monetary risks, particularly in the context of determining the purchase price. For this reason, we are happy to support you in the scope of our pre-closing or post-closing review (or post-acquisition due diligence) in enforcing your contractually agreed economic interests. These analyses take place after the actual signing of the contract and before (‘pre-’) or after (‘post-’) the actual execution of the transfer of businesses (‘closing’). In addition to preparing for of integration, the pre-/post-closing review serves in particular to investigate performance of the contract.
Typical activities of focus include:
- Determining purchase price adjustments based on the contractual arrangements
- Reviewing the balance sheet valuation approaches in the context of purchase price adjustments (such as working capital or net debt clauses)
- Reviewing compliance with economic performance indicators in the context of strategic planning (e.g. for earn-out agreements)
- Verifying and determining the contractually agreed working capital
- Auditing of closing accounts
- Confirmation of contractually guaranteed equity
- Verifying guarantees or exemption declarations arising from the purchase contract, which often play a role in escrow
As a result of our supporting numerous transactions and our many years of experience, our consultants are familiar with the individual options for influencing the purchase price or the purchase price adjustment, and can assist you in this respect with appropriate solutions. Our professional advice has helped many buyers of companies to achieve accommodations of the purchase price based on the purchase contract. In contrast, where representing the seller, we have in many cases been able to demonstrate that the buyer’s objections as raised in damage litigation were inaccurate and inappropriate as the basis for a reduction of the negotiated purchase price (under warranty liability).