Purchase price | Japan | Global Private M&A Guide - Limited External Content

Purchase price

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Is a purchase price adjustment common?

Frequency/market practice: Very common.

What type of purchase price adjustment is common (e.g., debt-free, cash-free)?

Frequency/market practice: Cash free/debt free and working capital are very common. Net asset value (NAV) is fairly common.

Is there a collar on the purchase price adjustment?

Frequency/market practice: Rarely; collars are not common.

Who usually prepares the closing balance sheet (where applicable)?

Frequency/market practice: This is usually prepared by the seller or the target company.

Is the balance sheet audited (where applicable)?

Frequency/market practice: Rarely.

Is an earn-out common?

Frequency/market practice: Rarely, but most Japanese companies understand the rationale for earn-outs and show willingness to consider them if proposed by a foreign counterparty.

Is a deposit common?

Frequency/market practice: Rarely.

Is an escrow common?

Frequency/market practice: Rarely, but it is occasionally requested. Japanese parties are not averse to escrow but in practice it is not common, with very few local escrow service providers. Buyers may also rely on holdback.

Is a break fee common?

Frequency/market practice: Rarely.

Global Private M&A Guide - Limited External Content

Japan

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