In any transaction, the Sale and Purchase Agreement (SPA) represents the outcome of key commercial and pricing negotiations. Purchasers and Sellers are becoming increasingly sophisticated in seeking to exploit the potential value to be gained through the negotiation and execution of the SPA.
Our dedicated SPA team provides expert support at all stages of a transaction from pre-deal work through to post-completion support. Pre-deal, the team assists in the identification and articulation of value issues related to pricing and deal completion mechanics, to assist clients in their SPA negotiations; Post-deal the team assists clients in protecting or generating value through the execution of any SPA completion mechanism.
- You are contemplating the disposal of a business and wish to consider the relative merits of 'locked box' and other completion mechanisms in the context of your transaction
- You are making a disposal and wish to guard against price erosion by potential acquirers, both through the determination of consideration to be paid and through any post completion mechanism
- You are making an acquisition and wish to ensure that potential 'debt-like' items and other financial risks have been identified and appropriately addressed, either by way of a reduction in consideration, through a completion pricing mechanism within the SPA, or through warranties and indemnities
- The transaction being contemplated includes a post completion pricing mechanism. You are seeking to position the SPA to your advantage and to minimise the opposing party's potential to manipulate price.
How we can support you
- We can assist you and your advisers in considering the adjustments to be made between Enterprise Value and Equity Value and in formulating the arguments and counter-arguments required to justify your proposed approach
- We can advise you in your determination of the appropriate financial benchmarks (or appropriate adjustments to price in the case of a 'locked box' (fixed price) mechanism) and related arguments, for the purposes of price negotiation and drafting the SPA
- We can advise you in your analysis of the working capital requirements of the Business with a view to you determining the normalised working capital for the purposes of your negotiation of the SPA
- We can work with you and your financial due diligence team to assist you in mitigating the risks identified during the due diligence phase
- We can advise you in your negotiations of the accounting aspects of the SPA. Such advice would include commentary on the pricing mechanism, relevant representations and warranties (if any), any other accounting related clauses of the SPA and any dispute resolution mechanisms related to the purchase price adjustment (including as appropriate, consideration of tax related items)
More about PwC's SPA services
- The SPA team has provided practical, commercial advice to clients in respect of over 200 SPAs in the last year
- The team combines the skill sets of financial due diligence, forensic accounting and tax advisory
- The team is at the leading edge of current market developments in the constantly evolving SPA arena.