The Share Purchase Agreement Of
3. Reverse triangular mergers – the buyer`s subsidiary goes together in the objective (the objective survives and the buyer`s subsidiary ceases to exist). Safeguards and liabilities must be reviewed to ensure that there is no misrepresentation. If this happens and is found later, there will be legal actions and possible remedies. After the transaction, there may be an adjustment of the purchase price in which the seller must refund the buyer in case of misrepresentations. When a company acquires all or a significant part of the shares of a target company, that investor also acquires its liabilities. Therefore, an M&A transaction is usually accompanied by full due diligence (“DD”), not only to understand the potential liabilities of the buyer, but also to clarify important information about the seller, such as.B. its actual asset base (fixed assets, contracts, finance, human resources and clients, among others). DD is the basic review or analysis of a target entity conducted by a buyer in order to compile and evaluate information that has a direct impact on the acquisition decision. From a legal point of view, SD is generally applied to corporate documents, general rights and disputes involving the target company, intellectual property (“IP”) and trade secrets, labour, anti-money laundering, anti-corruption, data protection, environmental compliance and others, which may be relevant to the specific sector of the target company. DD is also carried out with regard to the finances of the target company by accountants and accountants.
In the case of cross-border M&A whose purpose has assets and operations in different countries, SD must be the subject of several legal services and must be carefully coordinated in order to verify the actual assets and liabilities of the objective with regard to the laws and practices of each site. Insurance, guarantees and covenants in a SPA should prolong the execution and delivery of the SPA and the conclusion of the transaction and thus go beyond the conclusion of the transaction. It is possible that certain misrepresentations and breaches of warranty may not be found until after the conclusion. Maintaining warranties, guarantees and insurance (as well as indemnification terms) beyond the conclusion of the transaction protects the buyer if he receives less than he negotiated for. However, the parties should carefully examine the applicable law of the SPA in order to determine how that jurisdiction exposes and applies the limitation periods. Some jurisdictions prohibit claims for infringements that go beyond the court`s limitation period, even if the parties to an SPA explicitly agree on a language of survival that allows a right to an infringement to exceed the court`s limitation period. . . .