Purchase price | United States of America | Global Private M&A Guide - Limited External Content

Is a purchase price adjustment common?

Frequency/market practice: Very common; it is rare for a private acquisition to not include a purchase price adjustment.

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

Frequency/market practice: Cash free/debt free and working capital are the most common metrics on which purchase price adjustments are based. An adjustment based upon a target's net asset value is unusual.

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 the closing balance sheet.

Is the balance sheet audited (where applicable)?

Frequency/market practice: Rarely; historical balance sheets for completed fiscal years are often audited. Interim balance sheets are typically unaudited.

Is an earn-out common?

Frequency/market practice: Generally, earn-outs are included infrequently, although contingent deferred payments and earn-out structures have been used to bridge the valuation gap during economic uncertainty. Earn-outs appear in a majority of life sciences transactions.

Is a deposit common?

Frequency/market practice: Rarely.

Is an escrow common?

Frequency/market practice: Very common.

Is a break fee common?

Frequency/market practice: Rarely.

Global Private M&A Guide - Limited External Content

United States of America

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