M&A and Private Equity News
Mondaq Business Briefing › Germany Law Articles in English (2010)
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M&A and Private Equity News
CONTENTS
Editorial News From the Locked Box Distressed M&A: Swap of Debt for Equity in an Insolvent Company to Be Simplified by a New Law on the Facilitation of the Reorganization of Enterprises Kept Out: Appointment of Foreign Managing Directors That Do Not Have the Ability to Enter the Country at Will Purchasing a Shelf Company After the GmbH Reform: Problems and Practice New Developments in Management Board Compensation Jones Day's German M&A Practice Shortlisted for 2010 JUVE Award Editorial This issue of German M&A and Private Equity News provides a selection of current topics in the areas of M&A practice and corporate law, as well as relevant legislative projects. "News From the Locked Box" is the title of our practice-oriented article dealing with new developments in the area of purchase-price clauses in M&A acquisition agreements. We commence by examining the two common adjustment models in the context of share deals, namely, the working-capital adjustment based on a closing balance sheet and the simpler but more generalized locked-box model. We then discuss a merged approach that has been used in recent practice. This solution combines the advantages of both models and is therefore expected to be widely used in the future. The contemplated reform of the restructuring of insolvent companies in Germany is still in a fairly early stage. However, the draft for discussion prepared by the German Ministry of Justice is highly relevant to the area of distressed M&A, so we have decided to offer our comments at this time. The planned legal reform enables investors to obtain a majority or sole participation in an insolvent company by way of a debt-for-equity swap effected through a capital increase. The crucial novelty here is that if certain conditions are met, such measures may be effected without the consent of the incumbent equity owners, which is currently generally required. Such a share acquisition may in certain cases result in substantial advantages vis-à-vis restructuring by way of an asset deal, which constitutes the current standard practice. The appointment of a foreign national as the managing director of a GmbH, e.g., as a means of maintaining control following the acquisit...See the full content of this document
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