Influence of Due Diligence

Through the due diligence review, the buyer is able to find out more about the target company in detail

Creating an overall picture and estimating what he actually buys and what risks he assumes. The ones from the due

Therefore, insights gained have, in particular, an impact on the design of the purchase contract.

Not only in the measurement of the purchase price, they play a central role, but especially in the areas

the warranty as well as the exemptions.

transaction structure

Due to the risks and grievances that have become apparent in the due diligence process, it can – for both the buyer and the customer

also for the seller – advisable to refrain from a previously planned acquisition as a whole (share deal) and

Instead, only acquire individual, unencumbered and risk-free assets (asset deal).

purchase price

Due to the due diligence check, the buyer is able to carry out his own business valuation,

and in this way, if necessary, to correct the purchase price demanded by the seller.

Warranty Catalog

As the statutory provisions on warranty and liability law are fundamentally not in the interests of the parties

be fair or that these rules can hardly be implemented in practice in a company purchase, it is common

to exclude the statutory provisions in the purchase contracts and instead to oblige the seller in the sales contract. The injury  in the warranties listed in a catalog will then lead to the legal consequences agreed in the purchase contract.

If there are any risks involved in the due diligence check, the buyer may object to these risks or the risks involved

resulting damages under the guarantees, which the seller contractually takes on the sale

and indemnify. It is customary to provide for the liability of the seller exemption limits / amounts and access thresholds,

in order to avoid a claim for minor cases – measured by the size of the transaction – and therefore the

Interests of the seller.

In practice, it is also customary to withhold part of the purchase price or to hold it in trust by a third party

to ensure the regular claims for money in the event of a breach of In addition to the company purchase agreement, a fiduciary agreement between buyer and seller as well as a third party,

in particular a notary or a bank.

exemptions

If the conduct of the due diligence examination reveals risky facts that can be assigned to the sphere of the seller, the buyer will have an interest that he may not be able to obtain any information until after the transfer of the

Entrepreneur-taking risks are fully exempted by the seller. This will be especially for

Tax back payments relevant, e.g. only due to audits in the future, but on the

refer to the period of responsibility of the seller. The same often applies to matters relating to compliance with environmental regulations – unlike the guarantees, the exemptions in the company purchase agreement in the

Generally, situations in which it is still completely unclear whether or not they will cause harm and in which cases

the occurrence of the damage can still be avoided.

Pre-contractual information duties / evidence retention

Due diligence documents the condition of the company to be acquired. On the basis of due diligence

and the corresponding documentation in the purchase contract can therefore be v.a.nach the fulfillment of the pre-contractual information obligations by the seller to be followed accordingly.

In case of dispute, it may be of importance, what information the seller has disclosed and what circumstances the buyer

were known at the conclusion of the contract. This can, according to the typical regulation in company purchase contracts,

lead to the buyer losing his claims for the production of the contractual circumstance or damages due to the knowledge of defects that could be proven by the contractual documentation. From the seller’s point of view

Therefore, the due diligence examination also has the purpose of the release. In such cases, the buyer should, by way of exemption, uphold the claim of a possible compensation for his damage in the company purchase agreement.