Schedule - Purchase Price Based On Completion Accounts With ESCROW (Share Sales)

This Schedule - Purchase Price Based On Completion Accounts With ESCROW (Share Sales) replaces the purchase price schedule in the relevant share sale agreement where the default position is that the purchase price is paid in cash without reference to the target company’s net asset value at completion and without a mechanism to adjust if too much is paid initially.

It is intended for transactions where the purchase price is to be adjusted by reference to completion accounts, with part of the price held back in an escrow arrangement to support post-completion balancing payments and potential clawback.

What does Schedule - Purchase Price Based On Completion Accounts With ESCROW (Share Sales) do?

It sets out a purchase price mechanism under which completion accounts are used to calculate the target’s net asset value at completion, supported by an escrow account to manage balancing payments and return of surplus funds.

What does Schedule - Purchase Price Based On Completion Accounts With ESCROW (Share Sales) cover?

• Two payments at completion: an initial payment to the seller or sellers and a second payment into an escrow account.
• Calculation by accountants of the target company’s net asset value.
• A balancing payment to the seller or sellers from the escrow account where the initial payment falls short of the net asset value.
• A mechanism for the buyer to pay the excess directly to the seller or sellers if the escrow funds are insufficient to cover the shortfall.
• Return of any remaining escrow balance to the buyer once any shortfall has been satisfied.
• A clawback right for the buyer where the buyer has paid too much in the initial payment.

When should you use Schedule - Purchase Price Based On Completion Accounts With ESCROW (Share Sales)?

• The parties have agreed that the purchase price will be adjusted by reference to completion accounts rather than being a fixed cash price.
• You want part of the price paid into escrow at completion to facilitate post-completion balancing payments and potential return of surplus funds.
• The buyer requires a mechanism to recover an overpayment (clawback) if the initial payment exceeds the target’s net asset value.

Schedule - Purchase Price Based On Completion Accounts With ESCROW (Share Sales) is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.