Whether selling a business and aiming to achieve a clean exit at a predictable and favourable price, or acquiring a business and aiming for appropriate remedies in place when the target company’s financial position is not as expected, to have solid financial terms in the Sale and Purchase Agreement (SPA) is key in achieving these goals.
Purchasers and sellers are becoming increasingly sophisticated in seeking to exploit the potential value to be gained through the negotiation and execution of the SPA. There is considerable deal value to be gained or lost through the cash, debt and working capital price adjustment aspects of the sale and purchase agreement on a transaction.
Whenever you are doing a transaction, our teams can assist you in the following areas:
Help you consider the most appropriate price mechanism (i.e. a “locked box” or completion accounts);
Assist with the presentation of the proposed price mechanism/relevant pricing information to bidders to provide clarity around the expected basis of bids;
Assist you in determining a favourable (yet reasonable) position in relation to key value issues (such as the proposed normal working capital level and net debt definitions, depending on the structure adopted);
Assist you in developing arguments for the more judgemental positions and support you during pricing and SPA negotiations with bidders;
Working with your legal advisors, provide input into the SPA drafting in respect of the price adjustment mechanism, completion accounts policies and financial definitions (if relevant);
Consideration of the financial warranties to be offered in the SPA;
Assist you in drafting the Accounting policies and definitions for the completion accounts;
Assist you during the completion accounts process, including the preparation of the completion accounts.
We are a dedicated team of professionals advising on purchase price mechanisms (i.e. locked box or completion accounts), financial definitions and accounting warranties. We work hand in hand with your M&A due diligence team and legal advisors to identify critical accounting and commercial issues at a time when they can be converted into real value during the deal negotiation. Our in-depth knowledge and experience of working with on complex deals help you creating solutions for complex pricing challenges whilst avoiding pricing downsides.
