Mergers & Acquisitions Preliminary Agreements And Due Diligence, Memorandum of Understanding (MoU) - Law Assignment Help

Assignment 

1. Typical Course for an M&A Transaction in Germany (Overview) 
2. Letter of Intent 
• Overview 
• Main Content 
• Legal Aspects 
3. Confidentiality Agreement 
• Overview 
• Parties‘ Interests 
4. Due Diligence 
• Overview 
• Vendor DD 
• Course of the DD 
• Data Room 
• Legal Due Diligence Matters

Also, known as Memorandum of Understanding (MoU) 
• No legally defined wording in Germany 
• Agreement between vendor and the potential purchaser  (several Lois for one transaction are possible, e.g. in the event  of several bidders) 
• Based on the intention to purchase the target under certain  conditions, contains several binding and non-binding  commitments such as the further proceeding, the period of the transaction, and the burden of costs for each party 
• Helps to prevent misunderstandings.

Summary of the actual status of the transaction (target, deal  structure, assumptions, etc.) 
• Reservations, Conditions, Dealbreaker (e.g. right for each  party to terminate negotiations, etc.) 
• Negative conditions; if they occur, the parties are explicitly  not entitled to terminate negotiations 
• Explicit note about the non-binding character of the LoI  (parties intend not to be bound to enter into a SPA) 
 

transaction structure

• Can be part of the Los.

• Often signed before the first negotiation 
• Civil / Case law may stipulate non-disclosure rules 
• Due to an uncertain scope of these rules, the parties may  always enter into a CA 
• CA determines what is confidential information and the  extent of its use 
• Agreed non-disclosure obligations normally cover the interests of both parties.

• Common practice for a purchaser to carry out a due diligence  investigation of the target company before acquiring it 
• The investigation shall give the purchaser an understanding of  the commercial, financial and legal aspects of the target  company → Legal DD, Tax DD, Financial DD, Compliance DD 
• Possibility for the purchaser to evaluate incentives and risks in  acquiring the target company 
• Evaluated risks will be taken into account in the SPA  (necessity of W&I insurance, warranties, purchase price, etc.) 

Vendor Due Diligence 
• Optional 
• Instead of or before Buyer DD 
• Increasing practice 
• Advantages, especially for the vendor 
• Vendor is in control of information flow and access to business 
• Less risk of surprises in DD process, upcoming issues can be  fixed beforehand (value increases) 
• Streamlined and more consistent process (all potential partners,  strategic and financial, can be put on a similar timetable). 
 

 
The DD Request List should obtain the following matters: 
• Legal Organization 
• Acquisition agreements (M&A history) 
• Restructuring Measures / Insolvency proceedings 
• Assets 
• Real Estate 
• Financial (statements, accounts, etc.) 
• (Group) Company Agreements (PLTA, cash pooling) 
• Tax 
• Commercial Agreements 
• Employee Matters 
• Intellectual Property Rights (IP) 
 

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