Purchase price
Jump to
Purchase price Start Comparison
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 is very common. Working capital is fairly common. Net asset value is rarely seen.

Is there a collar on the purchase price adjustment?

Frequency/market practice: Collars are hardly ever used.

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

Frequency/market practice: In a seller's market, this is usually prepared by the seller; in a buyer's market, it is usually prepared by the buyer.

Is the balance sheet audited (where applicable)?

Frequency/market practice: Fairly common; this very much depends on the size of the transaction and the balance sheet date. It is fairly common in large transactions, but rare or nonexistent in small transactions.

Is an earn-out common?

Frequency/market practice: Fairly common; this is more common in transactions where the sellers continue to manage the target company after closing. They are less common where the seller is completely exiting. Earn-outs are sometimes used to bridge the valuation gap.

Is a deposit common?

Frequency/market practice: Rarely; a deposit is common to secure both purchase price adjustment and indemnification obligations of the seller under representations and warranties. As transactions on the basis of a 'locked box' purchase price mechanism are common in the Netherlands, deposits or escrows are unusual.

Is an escrow common?

Frequency/market practice: Fairly uncommon as transactions are usually done on the basis of a 'locked box' purchase price and residual liability is taken care of through taking out warranty and indemnity (W&I) insurance.

Is a break fee common?

Frequency/market practice: Rarely. Sometimes break fees in larger transactions are seen.