Share Sales vs Business Sales (Part 3): Transaction Trends, Earn Outs and Vendor Assistance

Velocity Legal

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Key Insights

Earn outs need to be understood before settlement. Earn out mechanisms can affect how the parties deal with each other after completion. Buyers and sellers should understand how the earn out is intended to operate before agreeing to it, particularly where part of the transaction outcome depends on what happens after settlement.
Post-settlement assistance should be defined clearly. Vendor assistance may be part of the commercial arrangement after settlement. Before agreeing to an assistance period, clients should think about what assistance is expected, how long it will last and what happens if the arrangement does not work as intended.
Transaction trends can affect how deals are negotiated. The episode discusses emerging M&A trends, including transactions involving foreign investment, earn outs and vendor assistance. These issues should be considered before final terms are agreed so the sale agreement reflects what the parties expect to happen after settlement.

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Transaction structure does not stop mattering once the sale agreement is signed.

In the final episode of this Explain That series on Share Sales vs Business Sales, Andrew Henshaw is joined by Lauren Gross to discuss emerging trends in mergers and acquisitions, including transactions involving foreign investment, earn out mechanisms and post-settlement assistance from vendors.

Following Part 1, which introduced the differences between share sales and business sales, and Part 2, which explored why tax is not the only consideration when choosing a structure, this episode looks at issues that can affect a transaction after settlement.

The discussion covers:

emerging trends in mergers and acquisitions;
transactions involving foreign investment;
earn out mechanisms;
what clients should think about before agreeing to a post-settlement assistance period;
practical issues that can arise after settlement;
what can happen when post-settlement arrangements do not go as planned; and
why buyers, sellers and advisers should consider these issues before finalising transaction terms.

A practical discussion for business owners, buyers, sellers and advisers dealing with share sales, business sales, earn outs, vendor assistance or post-settlement issues in M&A transactions.

For advice on share sales, business sales, earn outs, vendor assistance or M&A transaction terms, contact Velocity Legal’s Commercial team.

This podcast in no way constitutes legal advice. It is general in nature and is the opinion of the author only. You should seek legal advice tailored to your individual circumstances before acting on anything related to this podcast.

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