In this context, Tekinalp believes that if the majority of the shares are transferred to the target company, the seller is liable for material and legal defects and assets deficiencies5. This article assesses the results of the breach of insurance and guarantees to the target company, to which the shares are the subject of a share purchase agreement, and the liability of the seller resulting from such a breach. From the sellers` point of view, they should ensure that all references to representation are removed from the OSG, as well as a comprehensive comprehensive agreement clause to exclude any false, innocent or negligent representation based on guarantees contained in the agreement. In the view of both parties, full disclosure is essential. This is due to the fact that the buyer depends on the assets or shares acquired from all issues and issues disclosed. For the buyer, full disclosure means that there will be no surprises after closing. Disclosure plans can take a lot of time and attention to prepare, so it`s important that the seller starts preparing them as soon as possible. Often, the seller`s CFO works with the seller`s lawyers. If the transaction is not completed at the same time as the signing of the sales contract, the disclosure plans must be updated during the transaction. Although the judge found that the guarantees were not guarantees (and therefore there was no misrepresentation), it was found that there had been several breaches of the guarantee under the GSB, including account guarantees. The loss resulting from the warranty injuries was the difference between the value that GGL would have had if the corresponding guarantees were applicable (the purchase price of $16.75 million paid by Sycamore) and the actual value of GGL at the time of the BSG (which the judge estimated at $12 million). It should be noted that the amount of damage awarded for breach of the guarantee was significantly less than the amount that might have been owed for a right to misrepresentation. The case is a useful reminder that if the buyer and seller are to include insurance in a contract, there must be a clear wording to that effect.
While it is unlikely to ever be accepted by a prudent seller, if this is indeed the case, the buyer should try to include a provision where the seller acknowledges that he has given assurances that prompted the recipient to enter into the agreement. During negotiations on the purchase of a business, it is the buyer`s responsibility to demand more information from the seller regarding certain factual claims of the seller. This is due to the fact that the buyer bears more risk Systemic riskThe risk of the system can be defined as the risk associated with the collapse or failure of a business, sector, financial institution or entire economy.