Locked-Box | KPMG | DK
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- a purchase price mechanism in M&A transactions.



KPMG i Danmark


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By Rasmus Tarnowski, Associate Director at KPMG og Jakob Kristensen, Partner at Bech-Bruun

Often, several months pass between signing (date of signing of the transfer agreement) and closing (completion of the transaction), thus creating a potential conflict of interest between buyer and seller, as the price is agreed upon signing, whereas the legal ownership and control is not transferred to the buyer until closing. Pending closing, the company is being operated by the seller, and this causes the fundamental principal-agent problem to occur where the interests of the seller, or even the management of the company, are not necessarily in alignment with the interests of the buyer.

In any transaction, the choice of purchase price mechanism is key to ensuring optimal protection against any leakage of value. The buyer and the seller can agree on a number of different mechanisms. This article explains and analyses the pros and cons and typical considerations of using a locked-box mechanism as an alternative to the traditional closing accounts mechanism.

The article is in danish.

Do you want to know more?

If you are interested in learning more or have any questions, please contact Rasmus Stenhøj Tarnowski by email at rstarnowski@kpmg.com or phone at +45 52 15 02 49.

The article was published in Revision & Regnskabsvæsen 2016 no. 8 and can be downloaded here with permission from the Karnov Group.

© 2018 KPMG P/S, a Danish limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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