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Commercial contracts in practice - Coggle Diagram
Commercial contracts in practice
Data Rooms
If a subsidiary, the target is bought from the parent company
Information to be made available:
Key contracts
Financial statements
Employee information
Business assets information
Intellectual property
DD is a comprehensive appraisal of the business of the target in order to evaluate its commercial potential
Data rooms store all key data about a company and are often confidential in nature and stored virtually
Acquiring businesses
Sale of assets
Purchasing only the particular assets you require
Asset sale
Acquiring the business a a going concern or particular part of the business
Share sales
Documents required
Heads of terms - NOT binding but sets out parties' intentions.
Can be binding if expressly agreed
DD questoinaire and report - buyer subject to beware (caveat emptor)
Highlight anything suggesting a reduction in price and warranties to include
Confidentiality Agreement - continue indefinitely.
Buyer would ask for mutual confidentiality
Acquisition agreement - covers consideration warranties and indemnities
Disclosure letter - written by the seller and sets out matters that make the indemnities untrue,
Areas of concern
Anything significant with regard to contracts - expiry // change of control
High Value litigation
Target company does not change as it has been taken over completely
Acquiring all shares of a company
DD Process
Step 3: Buyer creates DD report
Step 2: Seller responds and sets up data room
Step 1: Buyer sends DD report