5. Contenido del Contrato de Compraventa de Empresas

Welcome and Overview

In this section, the speaker introduces the topic of analyzing specific clauses in a sales contract, focusing on common terms negotiated during the drafting of such contracts. The discussion will delve into valuation methodologies, pricing clauses, representations and warranties clauses, as well as provide models of different types of sales contracts.

Analyzing Common Clauses in Sales Contracts

• The impact of due diligence on sales contracts is highlighted.

• Additional materials provided include company valuation methods and pricing clause models.

• Models for representations and warranties clauses are discussed.

• Examples of sales contract models for share purchase agreements and participation purchase agreements are presented.

Key Considerations in Sales Contracts

This part focuses on essential aspects to consider when drafting sales contracts, including standard clauses influenced by Anglo-Saxon practices and the typical two-phase process involved in most sale transactions.

Standard Clauses and Contract Phases

• Influence of Anglo-Saxon practices on standard contract clauses is explained.

• Two-phase structure of sale transactions - sign-in phase followed by public deed phase - is outlined.

• Conditions precedent like regulatory approvals are crucial before moving to the public deed phase.

Contract Form and Structure

This segment delves into the formality requirements for sales contracts, emphasizing the distinction between private documents for share transfers versus public deeds for share capital changes.

Formality Requirements and Contract Structure

• Share transfer documentation typically starts with participant details followed by contractual terms.

• Public deeds may be required for selling shares based on company law.

• Inclusion of an index and definitions section enhances clarity in lengthy contracts.

Object of Sale in Sales Contracts

Here, the focus shifts to defining the object being sold in a sale transaction, particularly emphasizing the exchange involving shares or participations representing a company's capital along with its business operations.

Defining Object of Sale

• The object typically comprises shares or participations representing a target company's capital.

Parte de la Gestión y Cláusulas de Precio

This section discusses aspects related to management and pricing clauses in business transactions.

Management of Price and Payment Modalities

• The negotiation involves fixing the price and payment modalities.

• Pricing methods commonly include valuation approaches like book value, multiples system, or discounted cash flows.

• Prices may be subject to adjustments over time due to changing company valuations or post-contract contingencies.

Price Adjustments and Lock Box Concept

This part delves into price adjustments post-negotiation and introduces the concept of a lock box.

Price Adjustments

• Prices negotiated can undergo adjustments based on changing circumstances.

• Some prefer a fixed price without adjustments despite potential contingencies, known as a lock box concept.

Lock Box Concept

• In a lock box arrangement, the fixed price remains unchanged but comes with restrictions on certain actions between signing and closing to prevent value loss.

• These restrictions aim to maintain the company's valuation integrity by limiting specific activities that could impact its value negatively.

Manifestations and Guarantees of Sellers

This section explores manifestations and guarantees provided by sellers in business transactions.

Manifestations and Guarantees

• Sellers declare that the company complies with regulations, tax payments are accurate, accounts are correct, among other assertions.

• If these declarations are false, buyers can terminate the contract or seek appropriate indemnifications.

Extent of Declarations

• Declarations cover various aspects such as capacity, proper constitution of the company, financial statements' accuracy, etc., often spanning extensive documentation.

Material Adverse Change Clause

Discussion on the material adverse change clause in contracts amid significant events like COVID-19.

Material Adverse Change Clause

• Commonly included in contracts for financing or acquisitions to address drastic unforeseen changes allowing parties to exit if conditions become overly burdensome.

Impact of Events like COVID-19

• The current global crisis raises questions about how events like COVID-19 affect contractual clauses such as material adverse change provisions.

Legal Implications Amid Crisis

Addressing legal implications during crises like COVID-19 concerning contractual clauses.

Legal Ramifications

• The interpretation of material adverse change clauses amidst crises may lead to legal disputes regarding essential activities during states of emergency.

Judicial Resolution

Effects on Future Months and Limits to Responsibility

The discussion revolves around the effects in the upcoming months and the limits to responsibility when purchasing shares or stakes in a company.

Effects of Purchasing Shares

• Potential risks need to be considered when purchasing shares, as sellers aim to limit their responsibility but buyers seek assurances.

• Sellers will try to set limits on their liability regarding the amount and duration for which they are responsible post-sale.

• Limits are typically set based on the sale price received and the duration for which sellers must address contingencies related to labor systems, social security, and tax obligations.

Contract Development Phases and Interim Business Management

The conversation delves into the phases of contract development, including signing (shiny) and closing (close), along with interim business management considerations.

Contract Development Phases

• Contracts often progress through two stages: a private document signing phase followed by a public closing phase, allowing time for necessary actions such as securing financing.

• Various factors like third-party sentiments, regulatory approvals, and implementing optimal tax structures may influence the timeline without always constituting suspensive conditions.

Guarantees, Business Interim Management, and Good Faith Obligations

This segment covers buyer's preferences for solidary seller liability in guarantees, utilizing escrow accounts for delayed payments, interim business management during transitional periods between signing and closing dates.

Guarantees & Interim Management

• Buyers often seek solidary seller liability in contracts involving multiple sellers to ensure collective responsibility under civil code provisions.

• Escrow accounts can be beneficial for managing delayed payments efficiently within transactions.

Detailed Contract Clauses in Business Transactions

In this section, the speaker delves into the intricacies of contract clauses related to expenses, taxes, and various provisions commonly included in business transactions.

Expenses and Taxes in Contracts

• The buyer typically covers all operation expenses except for direct taxes like corporate tax and income tax.

• Indirect taxation responsibilities usually fall on the buyer unless specified otherwise.

Clauses and Provisions

• Contracts often include a notification clause for communicating important matters such as regulatory compliance.

• Miscellaneous clauses, known as boilerplate clauses, are common additions covering various aspects of the agreement.

Specific Contractual Elements

• Provision for assignment allows transferring rights to another company within the same group.

• Inclusion of an entire agreement clause emphasizes that the signed contract represents the final agreement between parties.

Legal Considerations in Contracts

This segment explores legal nuances within contracts, focusing on waivers, partial nullity clauses, and language considerations.

Legal Principles in Contracts

• Waiver clauses ensure that not exercising a right does not imply waiving it.

• Partial nullity clauses aim to preserve agreements by invalidating specific terms while upholding the rest of the contract based on Roman law principles.

Language and Interpretation

• Headings within clauses serve organizational purposes without altering contractual meanings significantly.

• Bilingual contracts are common due to globalization but require clarity on language precedence during conflicts between versions.

posibilidad de utilizar las site letters

The section discusses the use of site letters in contracts, highlighting their characteristics and purposes.

Understanding Site Letters

• Site letters are not part of the contract but are private documents that clarify or modify certain aspects between parties.

• These letters are kept secure to prevent their contents from being widely known among those with access to the acquisition contract.

• Site letters can be useful in resolving tax discrepancies when there is no established legal precedent, ensuring privacy and confidentiality.

Conclusion of the Chapter on Business Sales

This part concludes the chapter on business sales, summarizing key clauses and providing additional resources for learners.

Wrapping Up Business Sales Chapter

• Detailed examination of common clauses in business sales has been covered, along with supplementary model examples for reference.