Preparation for the Sale and Purchase Agreement
Careful preparation is key to a successful transaction. At Schlun & Elseven Rechtsanwälte, our lawyers will carefully prepare for the arrangement. For buyers, we will draft the letter of intent and any non-disclosure agreements applicable to the transaction. In M&As, we have acted on behalf of both buyers and sellers, and from our experience, meticulous due diligence is vital for both sides to conduct. This needs to assess all aspects of the firm – legal, financial and technical aspects. Our team performs thorough due diligence, which will analyse all of the key assets and liabilities of the selling firm, including their intellectual property such as copyright and trademarks.
For both buyers and sellers, the risks involved in the arrangement need to be brought to light. Our lawyers regularly carry out risk assessments, which play a big role in the design of warranties and indemnities during the sale and purchase agreement itself. The selling company should carefully assess the creditworthiness of the buying company. This ensures that they can deliver what they promise.
Should it be decided to carry on with the transaction, it needs to be assessed how the deal will be brokered and whether it will take place by a share deal or an asset deal. How the transaction will be completed has a crucial influence on the final sale and purchase agreement.
Regardless of whether you are the buying or selling partner in a transaction, our full-service approach will provide you with the legal counsel you need to prepare for an M&A transaction. Contact us now to work with our legal professionals.
Vital Elements of a Sale and Purchase Agreement
When designing a sale and purchase agreement, it is vital to determine the most important elements involved. These elements are where most of the disagreements arise during these negotiations.
When determining the value of an enterprise, there must be clarity as to how the final purchase price was reached. On behalf of clients who are in the process of selling, our lawyers will carefully examine how purchasers have concluded with the price offered. A meticulous analysis of the method used and the purchaser’s conclusions will determine whether the price offered is a fair one. For clients who are on the buying end of the sale and purchase agreement, our lawyers will conduct the required due diligence and provide your company with a framework by which the true value of the selling firm can be accurately assessed.
As a full-service law firm, our German business lawyers blend their knowledge from different areas to provide you with the required insight. From assessing fixed assets and balance sheet analysis to intellectual property due diligence, our legal team will transparently and clearly assess the company to find the value of the purchase.
Our lawyers will carefully draft and analyse the sales and purchase agreement. The final fee will not be reached or concluded until all aspects have been carefully examined.
Terms of Payment
The price itself is one important aspect, but how the payment will be made is another matter. In this case, the goals of the selling party and the buying party can be far apart. Having expert negotiators in your corner is crucial for ensuring that your aims are properly represented in such negotiations. As a seller, the security and reliability of payment will feature high on the priorities, whereas more flexible payment terms may be key for buyers.
Our lawyers have represented both sides in such agreement negotiations and are perfectly placed to determine what is achievable in these negotiations. We will represent your interests in a transparent manner and outline what is achievable within the framework of the sale and purchase agreement.
Restrictions within the Sale and Purchase Agreement
For buyers in the sale and purchase agreement negotiations, maintaining the value of their purchase can be a priority in their future success. Protecting this value may involve placing certain restrictions on the seller, such as placing limitations on opening a competing enterprise. Such restrictions can include preventing the seller from opening a company within a certain time-limit or within a certain geographical area. It can also prevent them from soliciting their previous company’s customers and employees.
It should be noted that these matters are carefully regulated under competition and antitrust law. Breaching competition law can lead to costly legal battles, which should be avoided whenever possible. Our legal team is well-versed in German and European competition law and will ensure that your agreement is not in breach of such provisions.
Warranties and Indemnities
Within the sale and purchase agreement, warranties are placed by the seller concerning the state of the company being sold. Thee warranties need to carefully examined, as if they are subsequently proven to be untrue, the buyer may have a claim for breach of warranty. In a sale and purchase agreement, these warranties should be designed to cover all areas of the company, including its assets, contracts, employees, property, intellectual property, copyrights and debt.
Careful analysis must be carried out during the due diligence process. Our lawyers will determine whether the warranties in question cover the risks involved in buying that specific company. As contract lawyers, our team will closely examine the sale and purchase agreement and ensure that any warranties and indemnities within the agreement fulfil your enterprise’s goals.
Seller involvement in the Company Following Sale
Following a successful sale, there tends to be a transition period between the new owners coming in and the sellers moving on. This allows the seller to introduce the buyer and the new reality to their customers and employees (and other interested parties). However, this period needs to be carefully managed. The time limit, set duties and the conditions of their involvement should be clearly outlined in the agreement.
Determining the right amount of involvement can be a tricky task. Consulting with our experienced corporate lawyers allows us to advise you based on what we have seen in the past. Our lawyers will assess the situation and determine whether the seller should be involved in this transition period and to what degree their involvement is needed.
Implementation of the Sale/Purchase
The sale and purchase agreement should also clearly regulate when the transfer of ownership should officially occur. The signing of the agreement may not be the time when the implementation of the agreement occurs. Similarly, there should be agreements reached on what happens in the period between the handover of ownership. For buyers, this is an important time as mistakes made in the terms of the agreement may lead to the company’s value decreasing during this vital transition phase.
Our legal professionals will ensure that these points and other vital implementation points are carefully considered.
Reasons to Work with Schlun & Elseven Rechtsanwälte
At Schlun & Elseven Rechtsanwälte, our dedicated corporate law team is ready to support you throughout the sales and purchase agreement negotiations. Our lawyers will advise and represent your company during the entire procedure, from the preparation of the documents and the early stages of deciding on your company’s priorities, through the negotiations and finally into the drafting of the agreement. As a full-service law firm with industry-specific expertise in many areas, our corporate lawyers will ensure that you have comprehensive legal counsel during the entire process. Our lawyers can be relied upon to find tailor-made solutions which consider your company’s goals and ambitions as key factors in the arrangements.
Our firm is highly rated by both our corporate and private clients. Excellent customer service, reliability and availability are central to our firm’s guiding principles and philosophy. With Schlun & Elseven Rechtsanwälte, you can be assured that you will receive leading legal advice wherever you are in the world. We have worked with clients from all over the world and in all industries. As our client, you can be assured that our team will be available in your time of need.
Transparency is another key cornerstone of our firm. Our lawyers work transparently and with clarity, ensuring that, as our client, you will not be surprised by our strategy. We work collaboratively when coming up with the ideal solution for our clients’ cases. Contact us now using our details below this article to start working with our corporate lawyers today.