Page 38 - SONEPAR 2021 - AcquisitionBook

6
PHASE 6: CLOSING
Anticipate and prepare CLOSING carefully
On the CLOSING date, property over the assets or shares of the target company will be legally transferred from the seller to the purchaser.
6.1 ANTICIPATE AND PREPARE CLOSING CAREFULLY
CLOSING must be carefully prepared under the control of the Regional or Country legal counsel and the external legal counsels.
In the days preceding CLOSING, all opened questions and issues shall be addressed and solved. Items flagged during DUE DILIGENCE shall be carefully checked to ensure all “negatives” have been solved. Compliance with contractual provisions of the SPA shall also be verified and a funds flow agreed with the HQ Treasury team shall be designed. Model CLOSING INDEXES are attached in Appendices 15 and 16.
On the CLOSING date, it is no longer time to negotiate or solve problems. Satisfaction of conditions precedent to CLOSING (e.g. third-party consents), whether to the benefit of seller or purchaser, shall be confirmed.
CLOSING can occur the same day as the signing of the SPA or after. Immediately after CLOSING, operational management takes over the purchased entity.
After CLOSING, the ACQUISITION SHEET must be updated to reflect:
➜ the final price paid if there was any price adjustment made;
➜ the final opening balance sheet to determine the actual GOODWILL.
6.2 AVOID “GUN JUMPING” AND CONFIDENTIALITY BREACHES
During the pre-CLOSING period, the seller and the purchaser must not take any step that amounts to implementation or partial implementation of the transaction (so-called “Gun Jumping”) until merger clearance has been obtained and the transaction has been closed. Gun Jumping may result in very significant fines and damage to reputation.
The seller and the purchaser can engage in some degree of transition and integration planning prior to CLOSING, provided they:
➜ ensure they continue to present themselves and act as independent entities rather than a single common entity;
➜ do not exchange any COMPETITIVELY SENSITIVE INFORMATION (except within the CLEAN TEAM and to the extent strictly necessary).
Key principles are the following:
➜ only exchange the minimum necessary information to allow the purchaser to satisfy regulatory filings/requirements and to start planning for integration;
➜ limit disclosure of confidential information to those individuals who have a genuine need to know and ensure such recipients do not use information other than for legitimate purposes;
➜ do not disclose COMPETITIVELY SENSITIVE INFORMATION to the purchaser’s employees who are not part of the CLEAN TEAM and especially to those involved in defining or applying commercial, marketing and pricing policies;
➜ seek advice from the SONEPAR Legal teams and external legal advisors prior to exchanging information before CLOSING.
36 SONEPAR - ACQUISITION MANUAL - 2021 - FOR INTERNAL USE ONLY
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