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

Is a purchase price adjustment common?

Frequency/market practice: Fairly common; purchase price adjustments are common.

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

Frequency/market practice: Working capital adjustments are most prevalent. Other adjustment metrics, including assets, cash and debt, are fairly common. Purchase price adjustments may be based on more than one metric.

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: The buyer usually prepares it; however, it is becoming increasingly common for the seller to prepare it.

Is the balance sheet audited (where applicable)?

Frequency/market practice: Not necessarily.

Is an earn-out common?

Frequency/market practice: Rarely used. The majority of transactions do not include an earn-out but frequency is increasing.

Is a deposit common?

Frequency/market practice: Rare; not common.

Is an escrow common?

Frequency/market practice: An escrow is fairly common, but often there is not a separate escrow for price adjustments and indemnity claims.

Is a break fee common?

Frequency/market practice: Rare; break fees are prominent in public target transactions but not common in private target transactions.

Global Private M&A Guide - Limited External Content

Canada

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