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The steps necessary to complete the transaction may cover a wide range of issues such as the receipt of approvals (e.g. by the supervisory board, public authorities such as the Cartel Office etc.), the spin-off of subsidiaries, the termination of cash pooling agreements etc. These measures are often defined as ‘conditions precedent’ of the agreement and the transaction will only be completed if these conditions precedent have been fulfilled.

4.3.5  Post-Closing Integration/Restructuring

Post-closing integration is a more difficult issue in the case of an asset deal, where every individual asset and liability has to be transferred to the buyer. In particular, with respect to contracts, this may become a lengthy process. In both share and asset deals, the buyer will have to monitor the deadlines for representations and warranties given by the seller.

4.4  Specific Problems

4.4.1  Financing

Not all buyers have the necessary cash to pay for an acquisition. In particular, financial investors, but also other buyers, draw on debt financing to pay the purchase price for a company. In this case, the seller has a vital interest that the buyer will eventually be in the position to pay the purchase price—this means that the debt financing already has to be agreed upon when the share purchase agreement is signed.

4.4.2  Merger Control Issues

A prospective buyer must also take potential merger control issues into consideration. Depending on the size/volume of the transaction, a corporate acquisition may, under merger control law, be subject to approval by public authorities, e.g. the Federal Cartel Office (Bundeskartellamt). Under the Act Against Restrictive Trade Practices (Gesetz gegen Wettbewerbsbeschränkungen, GWB) German premerger control requires that the Federal Cartel Office must be informed of a merger before its completion. By way of an informal notification, the Federal Cartel Office will approve proposed mergers giving no cause for concern within a period of one month from their notification.

Buyer and seller are not allowed to complete the transaction (e.g. merger) before the end of the investigation by the Federal Cartel Office. In the case of cartel law infringements, the transaction will be considered void and the Federal Cartel Office may impose a fine on each party. Signing the sale and transfer agreement will not be treated as an infringement if the agreement is subject to a ‘condition precedent’