Mergers and Acquisitions

Prior to a merger or acquisition, a letter of intent (also known as a memorandum of understanding) is often signed. This document outlines the intentions of the parties involved and sets out agreements on how the sale process will proceed. For example, agreements can be made regarding the price, the non-binding nature of negotiations, the due diligence investigation and confidentiality.

Including warranties and indemnities in an agreement allows parties to address possible risks and the liability for those risks. A warranty provides the buyer with a promise from the seller regarding the existence of a particular fact. If these promises turn out to be incorrect, the seller may be liable If prior to the purchase certain costs (for example, remediation costs for contaminated land) are anticipated, the seller can indemnify the buyer for these costs, meaning the seller will cover the expenses.

The two most common ways to sell a business are through the sale of shares or the sale of the assets and liabilities of the business. Several factors influence the choice of method, with the legal structure of the company being a key consideration. A share transfer is only possible for companies structured as a private limited company (BV) or public limited company (NV).

When buying or selling a business, the buyer often conducts an investigation to gain a clear understanding of the business being purchased. This investigation, known as a due diligence investigation, varies in scope depending on the financial significance and size of the business. The buyer typically examines legal, financial, and tax aspects of the business.

A joint venture is a collaboration between two or more companies. There are various ways to structure a joint venture. For example, two companies can work together based on a contract (collaboration agreement) or establish a new business, such as a private limited company (BV), owned by the collaborating parties.