402 11 Takeovers: Introduction
Credit agreement. VC firm,
entrepreneur.The entrepreneur has a further incentive
to act efficiently if the entrepreneur has
borrowed money to subscribe for new
shares in the company.
Contract for the sub-
scription of shares
by the entrepreneur.Entrepreneur,
target company.Employment con-
tract.Entrepreneur,
target company.Enables the VC firm to mitigate risk
where the target company’s business is
dependent on the personal input of the
entrepreneur. Sanctions for breach should
be set out in the master agreement be-
cause of several legal constraints.
Contract for the pur-
chase of advisory
and administrative
services.VC firm, target
company.Enables the VC firm to make a profit
selling services and to monitor the in-
vestment.Schedules, Annexes. Parties to each con-
tract.Contain technical information. This
makes it easier to draft the documenta-
tion.Harmonisation of contract law. Because of the nature of acquisitions and the large
variety of contracts used by the parties, the legal background rules applicable to
acquisition contracts can only be harmonised to a very limited extent. The first
step would be to harmonise the regulation of contracts for the sale of shares or as-
sets.
According to its wording, the CISG does not apply to share deals.^16 Neither is it
designed to be applied to asset deals, as the target’s assets cannot be regarded as
typical movable goods. However, the regulation of sale of goods has been used as
a model for the regulation of other contract types. For this reason, business acqui-
sition contracts have not been excluded from the scope of the part of the DCFR
that applies to contracts for the sale of goods. The sale of goods provisions of the
DCFR apply to such contracts “with appropriate adaptations”.^17
In the Member States, business acquisition contracts can be covered by the pro-
visions applicable to sale of goods or the sale of rights (see Chapter 16) For his-
torical reasons, the differences between the contract laws of different Member
States can be relatively small (see Volume II). This means that the provisions of
the CISG and the sale of goods provisions of the DCFR can often be used as a
“shortcut” (see also Volume II).
(^16) CISG Article 2(d).
(^17) DCFR IV.A.–1:101(2).