Due diligence
The careful examination of the target company before the purchase from a legal, tax, financial and operational perspective.
Due diligence is the systematic risk review of the target company, usually after conclusion of the NDA and the letter of intent. It covers corporate law, contracts, employment, taxes, finance, IP and compliance, mostly via a virtual data room. The findings feed into the purchase price, the warranties and the indemnities.
In a share deal due diligence is especially important because the buyer takes over the legal entity with all its legacy issues. Identified risks are disclosed via the disclosure letter and addressed in the share purchase agreement. In Austria a seller cannot shift defects it has fraudulently concealed, even where warranty liability is excluded.
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This explanation gives a general overview of Austrian law and does not replace advice in an individual case. The specific circumstances of your transaction are always decisive.
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Non-disclosure agreement (NDA)
A contract obliging the parties to keep confidential the information disclosed during the transaction process.
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Warranties
Independent assurances by the seller about specific characteristics of the company, the breach of which triggers damages or price-adjustment claims.
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Disclosure letter
A seller disclosure document recording exceptions and qualifications to the warranties given in the purchase agreement.
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Share deal
Acquisition of a business by purchasing the shares (for example GmbH shares) in the legal entity, which continues with all its assets and liabilities.
Structuring a deal, reviewing a contract, securing the risks?
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