Purchase price
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Purchase price Start Comparison
Is a purchase price adjustment common?

Frequency/market practice: Purchase price adjustments are common.

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

Frequency/market practice: Various types are seen, while cash-free, debt-free and working capital adjustments are the most common. The "locked box" mechanism is also popular for the most sought-after assets.

Is there a collar on the purchase price adjustment?

Frequency/market practice: Rarely.

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

Frequency/market practice: Pre-closing estimates are usually prepared by the target company on instruction of the seller. A closing balance sheet is usually prepared by the target company on the instruction of the buyer and verified post-completion by the sellers.

Is the balance sheet audited (where applicable)?

Frequency/market practice: Rarely.

Is an earn-out common?

Frequency/market practice: Fairly common; earn-outs are common in private equity transactions when sellers continue to manage the target company after closing. They are also increasingly common to bridge valuation gaps. Otherwise, they are not very common.

Is a deposit common?

Frequency/market practice: Rarely.

Is an escrow common?

Frequency/market practice: An escrow is fairly common as a completion mechanism to ensure price payments, which, in the case of an acquisition of shares in joint-stock companies, is replaced with an intermediation of a brokerage house. It is increasingly less common as collateral of the seller's liability for representations and warranties (although it depends on the bargaining position of the parties).

Is a break fee common?

Frequency/market practice: Fairly common.