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

Frequency/market practice: Fairly common, but depends on the deal.

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

Frequency/market practice: Cash free/debt free, working capital and NAV adjustments are all fairly common.

Is there a collar on the purchase price adjustment?

Frequency/market practice: Collars on the adjustment of a purchase price are common. Parties often agree on a floor or a cap on the adjustment.

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

Frequency/market practice: Either party may prepare the closing balance sheet, however this depends on whether the closing balance sheet is delivered pre or post the completion of the transaction. Often the target company may prepare this given that it has the relevant financial information easily at hand. The party not involved in preparing the closing balance sheet is provided with the opportunity to review the balance sheet and annual financial statements, with referral to an independent expert in the event of a dispute.

Is the balance sheet audited (where applicable)?

Frequency/market practice: Fairly common.

Is an earn-out common?

Frequency/market practice: Fairly common. Earn-outs are mostly used in transactions where the seller continues to manage the target company after completion. They are rarely used where the seller is exiting completely.

Is a deposit common?

Frequency/market practice: Rarely.

Is an escrow common?

Frequency/market practice: Fairly common.

Is a break fee common?

Frequency/market practice: Rarely.