Customer prepayments, vouchers and open services must be itemised, valued and regulated in the purchase agreement in a business acquisition.
BRANDAUER Rechtsanwälte
Salzburg law firm for corporate, company and transaction law
Every transaction is handled by a coordinated team of lawyers, legal staff and specialists. In company acquisition matters we look at structure, contract, tax and liability together.
Customer prepayments and vouchers are more than an accounting line in a business acquisition. They show that customers have already paid while the business still has to perform. If the buyer takes these obligations over without review, the price may be too high and liquidity can be lost immediately after closing.
The buyer therefore needs a list of open prepayments, vouchers, service packages and unperformed services. The key question is whether those obligations are assumed, economically compensated by the seller or reflected in the price mechanism.
This post separates the issue from general liabilities and consumer-law discussions. The focus is the transaction-specific allocation of open customer services.
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Without a list it is unclear which performance obligations the buyer economically assumes.
A mere balance-sheet figure is not enough. The buyer should see by customer which amount has been received, which service is open and whether a voucher or prepayment can still be redeemed. Only then can price adjustment, indemnity or closing adjustment be chosen.
The boundary to general old liabilities is addressed in our post on liabilities in an asset deal.
If list, performance duty and economic compensation are regulated, the buyer can reflect the risk in valuation and contract. Also review cancellations, warranties and VAT allocation.
If allocation is unclear, the buyer may take over revenue that economically stayed with the seller while the performance remains with the buyer. This should be cleaned up before signing.
The data room should contain more than an account for received prepayments. Needed is an operating list: customer, amount, service content, redeemability, cancellation rate and expected fulfilment cost. Only then does the buyer see the economic burden after closing.
The issue touches the purchase price adjustment, because received prepayments often function economically like a customer liability.
In an asset deal, contracts and obligations do not transfer automatically in every respect. A clear contractual allocation is needed for which customer relationships are assumed and which open services the buyer will perform. Consent and transfer questions must be reviewed separately.
The share deal or asset deal page explains the general distinction. With vouchers and prepayments it becomes highly practical.
If the buyer performs after closing, the economic benefit of the payment already received must be considered. Options are price adjustment, indemnity or holdback. The suitable mechanism depends on amount, redemption probability and margin.
Generic wording such as all open customer claims are assumed is rarely enough. The agreement should name the categories and make the calculation traceable.
This overview shows which special issues must not disappear in generic clauses.
| Point | Why it matters | Contract consequence |
|---|---|---|
| List List | Line items show the real burden. | Data room schedule and warranty. |
| Assumption Assumption | Not every duty transfers automatically. | Review contract transfer and consent. |
| Compensation Compensation | Buyer performs after closing. | Price adjustment or indemnity. |
Austrian civil and commercial law provide the general framework. Tax issues for vouchers must be reviewed separately.
Practice note: Do not let vouchers and prepayments disappear into a generic liability line. The buyer needs a customer-based list and a specific price rule.
Vouchers and prepayments often have a consumer dimension. In a business acquisition another question is central: who bears the economic risk of paid but unperformed services?
This post therefore stays within the M&A context and does not replace a general review of individual customer claims.
Economically, vouchers may represent an open performance obligation. Legally, the classification depends on structure, contract transfer and actual terms. For the purchase price they should always be reviewed separately.
No. The buyer needs an itemised list with customer, amount, service content and redemption probability. Only then can the risk be valued.
Common tools are price adjustment, indemnity, holdback and warranties on the completeness of the open customer-services list.
A further post or focus page for the next review step.
A further post or focus page for the next review step.
A further post or focus page for the next review step.
A further post or focus page for the next review step.
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