When it comes to agreeing on a purchase price the parties may either opt for a fixed purchase price or a variable purchase price. In an asset deal, a fixed purchase price is usually agreed and any event occurring between the signing and the closing of the sale and purchase agreement (SPA) is addressed by a covenant/warranty claim or a right to withdraw.

In a share deal, a variable purchase price is usually agreed. This addresses the issue that the value of the SPV changes between the signing and the closing of the SPA. In real estate related transactions the closing accounts mechanism is the preferred option for the calculation of a variable purchase price as usually there are only a few assets and liabilities in the SPV that are closely connected to the operation of the property. If a fixed purchase price is agreed in a share deal then a locked-box mechanism is usually used to protect the purchaser’s position.

Purchase price

In 2020 a fixed purchase price was agreed in 69% of our transactions. This, as in previous years, shows a close correlation with the proportion of asset deals.

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