It is worth mentioning here the increasingly popular and important amendments that are increasingly accompanied by co-purchase contracts, i.e. tax dscriptors already mentioned at the beginning of this article. A tax return is a separate document signed by both parties at the same time as the SPA. This document is derived from English law and is a very practical instrument used by the parties to a transaction to indicate the measures to be taken in the event of the appearance of certain circumstances set out therein in tax matters. Since tax matters are currently a very sensitive aspect of transactions due to significant changes in the legislation and practices of tax authorities, a tax return generally provides that the seller is fully responsible for the company`s tax arrears relating to the period prior to the closing date of the transaction. For potential sellers, the most important conclusion of this case is that it is incredibly risky to give “blind” guarantees that rely only on your managers or consultants. Pre-closed covenants usually limit what a seller can do before closing. As a rule, covenants given by the seller are heavier than those of the buyer, as the seller usually retains control of the destination until the transaction closes. As it is promised to do certain things or not to do so, pre-closed covenants are common in deferred closing transactions, in order to protect and obtain the value of the acquired business between the execution of the SPA and the closing of the acquisition. When a company acquires all or a significant part of the shares of a target company, that investor also acquires its liabilities. Therefore, an M&A transaction is usually accompanied by full diligence (“DD”), not only to understand the potential liabilities of the acquirer, but also to clarify important information about the seller, such as.
B its actual asset base (fixed assets, contracts, finance, human resources and clients, among others). DD is the basic review or analysis of a target business conducted by a buyer in order to compile and evaluate information that directly impacts the acquisition decision. . . .