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ARTICLE · 17 FEBRUARY 2020

M&A Pricing: Completion Mechanisms

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One of the key issues to be addressed in M&A transactions is the determination of the purchase price when signing of the share purchase agreement ("SPA") ...

BelgiumCorporate/Commercial Law

One of the key issues to be addressed in M&A transactions is the determination of the purchase price when signing of the share purchase agreement ("SPA") and the completion of the deal do not coincide. Depending on the specific characteristics of the transaction, the aforementioned specified dates can be weeks or even months apart. As companies remain active between signing and completion, their value is subject to change during this period. Since title to shares is only transferred upon closing, the purchase price should be determined then. The challenge discussed here is therefore how to solve the issue of the uncertain price on completion at the time of signing.

There are two widely accepted completion mechanisms in M&A transactions in order to tackle this challenge, which will be discussed below, i.e.:

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