Purchase Agreement Issues List

With regard to acquisitions of private technology companies, the COVID 19 crisis is expected to raise the level of agents or compensation rights. This may be the case especially for transactions where, despite the pandemic, a seller has managed to maintain its expected peak price. In exchange for accepting such a “high” value, the buyer may try to pass more on the risk of the seller breaching the sales contract to the seller. In addition, buyers are less reluctant to seek “special compensation” when identifying a particular risk in the seller`s activity, and the consequences of such a post-closing risk are less predictable or predictable following the pandemic. It goes without saying that acquired assets must be included in an asset sale. The agreement should also mention all the debts assumed by the buyer and indicate that no other liabilities will be covered. In the event of a share sale, the buyer should not rely on the seller`s books. The agreement should indicate all assets and liabilities that are acquired. Remember, whatever the text of the agreement, tax authorities often have the right to seek recovery from a buyer, so get tax certificates as a condition for any purchase.

In many acquisitions of private technology companies, a deduction or withholding of part of the purchase price is negotiated to protect the buyer from losses resulting from violations of the seller`s guarantees or agreements or certain contingencies (e.g. B, the exercise of derogatory rights by a shareholder). Sometimes there is a second treuhandback or holdback to protect the buyer in the event of a post-closing price drop on the basis of a provision for working capital adjustment. For some transactions, there may also be a special trustee/holdback to protect the buyer from specific issues, such as ongoing litigation or threats of litigation.B. It is rare for a company “as it is” to be sold without closing compensation, in which case there would be no trust/holdback. Here are some of the key issues related to the management of trust funds and holdbacks: labour market transactions, particularly in the case of technology companies where the use of stock options to engage employees is more common than in the case of other private companies, will generally include a number of important personnel and performance issues that need to be addressed in the acquisition agreement. The personnel issues, which often appear in mergers and acquisitions transactions, are: the sales contract should determine how and where disputes will be resolved. Although the majority of acquisition agreements are not due to the judicial system, many buyers and sellers, particularly those who have already been the subject of previous dispute resolution proceedings, often prefer to use an exclusive and confidential arbitration provision, for example. B under the JAMS commercial arbitration rules in place at the beginning of the arbitration process, before an arbitrator elected by JAMS.