Is a purchase price adjustment common?
Frequency/market practice: Purchase price adjustments are fairly common.
What type of purchase price adjustment is common (e.g., debt-free, cash-free)?
Frequency/market practice: All types are seen, including working capital adjustment, cash-free, debt-free, net asset value adjustments, earn-out adjustments and others.
Is there a collar on the purchase price adjustment?
Frequency/market practice: Collars are rarely seen.
Who usually prepares the closing balance sheet (where applicable)?
Frequency/market practice: Usually the buyer, but sometimes the target company.
Is the balance sheet audited (where applicable)?
Frequency/market practice: Not necessarily, although it is generally seen in practice.
Is an earn-out common?
Frequency/market practice: Not very common but seen in some cases (now more frequently seen in smaller transactions). It is more common in private equity transactions where sellers continue to manage the target company after closing. It is less common where the seller is completely exiting.