Post-Closing Merger Consideration Adjustment and Payments Clause Samples
The Post-Closing Merger Consideration Adjustment and Payments clause defines how the final purchase price in a merger may be adjusted after the transaction has closed. Typically, this clause outlines a process for reviewing the target company's financial statements post-closing and comparing them to agreed-upon benchmarks, such as working capital or net debt levels. If discrepancies are found, additional payments may be made to the seller or refunds issued to the buyer to reflect the true value of the business at closing. This mechanism ensures that both parties receive a fair outcome based on the actual financial position of the company at the time of transfer, addressing uncertainties and protecting against unexpected changes in value.
Post-Closing Merger Consideration Adjustment and Payments. (a) As promptly as practicable, but in no event later than sixty days following the Closing, Parent shall in good faith prepare and deliver to the Securityholders’ Representative a written statement (the “Closing Statement”), based upon the books and records of the Company and its Subsidiaries, which shall set forth Parent’s calculation of (i) Working Capital, which shall be based exclusively on the facts and circumstances as they exist as of the close of business on the day immediately preceding the Closing Date and shall exclude the effects of any event, act, change in circumstance or similar development arising or occurring thereafter (it being understood and agreed that Working Capital shall be used to measure changes in Working Capital and not as a form of indemnification and in furtherance of the foregoing, to the extent Parent asserts there is a current liability under this Section 2.06 that was not reflected in the calculation of the Target Working Capital, the Target Working Capital shall be recalculated in accordance with the definitions of Working Capital and Target Working Capital and the methodology set forth on Exhibit B to reflect such current liability to the extent such current liability is included in the calculation of Final Working Capital), (ii) the adjustments to the Target Working Capital pursuant to clause (i) above and the resultant adjustments to Estimated Working Capital (which shall be recalculated to reflect such adjustments), (iii) Closing Date Funded Indebtedness, (iv) Unpaid Company Transaction Expenses, (v) Closing Date Cash and Cash Equivalents and (vi) the Final Merger Consideration based upon such items. No actions taken by Parent on its own behalf or on behalf of the Surviving Corporation or its Subsidiaries, at or following the Closing shall be given effect for purposes of determining the Closing Working Capital.
(b) If Parent’s calculation of the Adjustment Amount is positive, (i) Parent shall immediately pay to the Securityholders’ Representative, for further distribution to the Securityholders (to be paid to the Securityholders as if such amount were being distributed pursuant to Section 2.06(e)(i)), such positive Adjustment Amount (it being understood and agreed that such payment shall not limit the rights of the Securityholders’ Representative pursuant to this Section 2.06) and (ii) Parent and the Securityholders’ Representative shall immediately deliver a joint instruction to the Escrow Agent instructing the Escr...
Post-Closing Merger Consideration Adjustment and Payments