The terms of compensation eventually granted by the buyer or seller are also presented, which covers all costs that may result from the transaction due to conditions that were met prior to the closing of the transaction. A special tax treatment to which the buyer or seller may be entitled is also mentioned in the contract. The typical compensation obligations of a seller are, among other things, compensation to the buyer of: the income is usually consisting of additional conditional payments which, once the closure is completed, can be made to the satisfaction of certain milestones related to the future benefit and expire at a given time. Earn-Outs reduce the acquisition risk for a buyer and offer the seller a better price if he achieves The goals of Earn-Out. Earn-outs can be financial (e.g.B. achieve future revenue targets) or non-financial (z.B.key objective customers are maintained after the transaction) and can help manage differences of opinion on the value of the objective, if there are uncertainties about its future prospects, whether it is a start-up with limited financial results, but has potential for growth , or where the seller will continue to run the business and where the buyer wants to motivate the seller`s future performance. There are risks associated with misrepresentation of achievements or simply inconsistent accounting and evaluation methods; Therefore, disbursement reserves should be carefully developed and should include very specific milestones, a clear legislative period, a clear formula or method for determining salary, a method of guaranteeing payment (for example. B fiduciary or guarantee) and merit-specific closing pacts. Therefore, a salary can be considered as an additional payment for the achievement of agreed objectives after closing.
The structure of a company`s shares is often found in the company`s statutes. The purchase price provisions should also address several subsidiary issues, including: (i) how the price is met, (ii) when the price is to be paid and (iii) whether it is a fixed amount or if it is a price adjustment mechanism. Various provisions are an integral part of a well-developed agreement. Many embellish these terms and consider them a standard boiler platform when they are actually important.