Denmark
Answer ... Several documents are typically prepared for a M&A transaction, in addition to the main transfer agreement.
The most common documents include the following:
- Non-disclosure agreement: This document, also known as a confidentiality agreement, is generally drafted by the seller.
- Exclusivity agreement: If not included in a letter of intent, an exclusivity agreement may be relevant. This document is generally drafted by the buyer and affords exclusivity to the potential buyer for a limited period.
- Letter of intent: This document is generally drafted by the buyer and sets out the intentions of the parties, such as the timeframe for the transaction.
- Due diligence checklist. This document sets out the structure of the due diligence process. It can be delivered by both the seller’s or buyer’s advisors.
- Set of warranties/guarantees: This document is normally drafted by the seller and negotiated by the parties. The warranties/guarantees are provided by the seller.
- Share transfer agreement: The main document setting out the terms applicable to the transaction.
- Shareholders’ agreement: In situations where the seller will continue as a shareholder in the target, a shareholders’ agreement might be relevant.
Denmark
Answer ... Non-disclosure agreement: This usually covers the following matters:
- what information is considered confidential;
- that the information is provided only for the purpose of negotiating the potential acquisition and may not be used for any other purpose, either by the buyer or by anyone else;
- that the recipient is obliged to keep the information confidential and not disclose it to third parties, except for internal employees, consultants and others who need the information as part of the transfer process;
- the duration of the confidentiality obligation;
- an employee non-solicitation obligation of the buyer and sometimes the seller (subject to mandatory Danish legislation); and
- the applicable law and venue in case of a dispute relating to breach of the non-disclosure agreement.
Exclusivity agreement: This is an agreement which affords exclusivity to the potential buyer for a limited period. During the exclusivity period, the seller cannot initiate negotiations with other potential buyers.
Letter of intent: This is a document that states the intentions of the parties and provides the basis for the sales process and negotiations between them. It only states the intention of the parties, so as such it is non-binding for the most part.
Due diligence checklist: This includes the information to be delivered to the buyer relating to the target. The due diligence checklist must be designed to ensure that all relevant information relating to the target is disclosed to ensure that the seller has provided the information relevant for the buyer. The due diligence material limits the liability of the seller, since the information disclosed to the buyer will be assumed to be known to the buyer.
Set of warranties/guarantees: This document includes the commercial warranties provided by the seller to the buyer. The warranties are often negotiated based on information delivered by the seller during the due diligence process.
Share Transfer Agreement: This document sets out the terms of the transaction, including the purchase price, terms for its payment, conditions for closing, deliveries to be made on closing, the claim mechanism, any pre- or post-closing covenants and governing law and venue.
Shareholders’ agreement: This regulates the joint ownership of the company. A shareholders’ agreement is often a comprehensive and thoroughly negotiated document governing:
- the control of the company;
- the information level; and
- the exit process.
Denmark
Answer ... The parties often include information on choice of law and venue in each transaction document. If the law and venue have not been agreed between the parties, the rules of international law will apply and determine which law will govern the relevant transaction documents.