It must be clear from the above that it is important to enter into sufficient and clear agreements on the sale and purchase of shares between the seller and the buyer within the BSG. The client`s wishes and intentions are (partially) leaders. Since the sale of shares is subject to the general rule of “careful buyers,” the law does not offer much protection to the buyer if unexpected debts or problems are brought to light after the sale of the business. In order to protect the buyer from such unforeseen costs, a DSG contains extensive guarantees from the seller, in which it provides statements and commitments on the state of the business and assets of the business, and possibly compensation in favour of the buyer allowing him to recover any losses incurred by the seller. The execution of the SPA and completion (when the shares are transferred) is often done, but not always, at the same time. The Spa must describe in detail what happens at the conclusion, for example: Share purchase contract: Security This spa article deals with the possible implementation of guarantees by the buyer (z.B. as part of a subordinate loan from the seller to the buyer). Or by the seller (for example. B as part of guarantees or allowances). While you can modify a SPA model, the advantage of involving corporate lawyers in the design and negotiation of the share purchase contract is that they can help ensure that they reflect a fair and commercial distribution of the risk of the transaction between the buyer and the seller. With a lawyer, you can also protect yourself from the discoveries and painful debts of resale. In addition to potential fair value adjustments for existing items on the opening balance sheet, the acquired entity may also present assets and liabilities that did not meet the criteria of the previous approach.
For example, if a company has a serious brand name developed in-house for its product sold, that brand would not be on the balance sheet. If this business is acquired, the buyer will certainly have taken the brand into account in the purchase price he was willing to pay and will have paid in turn goodwill. In this case, reporting standards require the evaluation and recognition of the brand in the books. Other examples of these identifiable elements are customer relations, databases or contracts, intellectual property, advantageous or unfavourable contracts, and potential liabilities. This is because the parties sometimes feel it is appropriate to submit the final conclusion of the purchase transaction to a number of conditions that must be met within a specified time frame. For example, obtaining prior administrative authorization necessary for the transfer, the favourable resolution of a dispute in which the company to be acquired is currently involved, etc.