Legal support of the transaction during M&A
Successful sale of a company/group of companies or assets in Ukraine is possible only with preliminary preparation and planning, which may require considerable effort and time.
All M&A agreements are unique in their own way, so the distinguishment of separate stages in agreements is rather arbitrary. Some stages can be skipped, combined and swapped. However, in any merger and acquisition agreement there is one key point: the signing of the transaction documents by the parties (as a rule, purchase and sale agreements and some related documents).
Main points of support of the sale and allocation of assets during M&A
When the parties to a potential agreement expressed mutual interest, it is time to outline the main terms. As a rule, it is impossible to do without the participation of lawyers in the process of agreeing on the main terms of the agreement.
The basic terms contain such main parameters of the agreement as a description of the object of the agreement, the price and procedure for settlements between the seller and the buyer, the procedure for joint management of the object of the agreement (if less than 100% is bought in the object), project. This list is not exhaustive and varies depending on the specifics of each transaction.
In addition, in the main terms it is advisable to pay attention to the costs distribution in connection with the transaction. As a rule, each party bears its own costs. But in some cases, the seller may agree to reimburse the buyer for the cost of inspecting the purchase object. Regardless of how the costs are shared between the parties, the relevant provisions of the main terms shall be binding.
The key stage of the M&A transaction is the signing of the sale and purchase agreement. This moment is preceded by a serious work of lawyers to agree on all the terms of the agreement. As a rule, the main discussion revolves around the mechanism of payment for the purchase object; the scope of the warranties provided by the seller for the purchase, and the limitations of the seller’s liability. Each of the main blocks of the sale and purchase agreement is described in more detail below.
Even if the buyer has carried out a thorough inspection before the transaction, the purchase object may still contain hidden defects. The presence in the sale and purchase agreement of the seller’s guarantees on the transaction subject allows the buyer, after the ownership transfer, to recover from the seller the damage caused to the buyer by the hidden defects of the object.
The scope of guarantees is usually the subject of tough negotiations in the process of concluding a sale and purchase agreement. Therefore, it is highly desirable to determine the risks that will be covered by the guarantees, even at the stage of agreeing on the main terms.
In the process of concluding, the parties ensure the registration of the ownership transfer of the contract object, and also, depending on the terms of the settlement agreement, make full or partial payment of the purchase price.
If the transaction is not closed at the same time as the contract signing, it is important that the buyer reserves the right to withdraw from the contract if the object condition deteriorates or any guarantee on the object is violated between the date of signing and the closing date.