How integration after closing succeeds: 100-day plan, takeover of management, change-of-control consents, purchase price adjustment, earn-out and warranty claims.
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.
With the signing and completion of the purchase contract a transaction is not yet finished. Only the phase after closing decides whether the acquired company actually delivers the value hoped for. A neglected integration is one of the most frequent reasons why a company acquisition falls short of expectations.
This post shows what matters in the legal and organisational integration. The focus is on the 100-day plan, the takeover of management with the necessary commercial register and other register changes, the change-of-control consents to be obtained as well as the harmonisation of IT, compliance and contracts. It also covers employees and culture.
Alongside this, the open legal points from the purchase contract keep running after closing: the completion of the purchase price adjustment, the monitoring of the earn-out and the assertion of warranty claims. Whoever orders these topics early secures the success of the transaction.
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A 100-day plan orders the first steps: taking over management, register changes, change-of-control consents and the harmonisation of the most important processes.
Whoever starts after closing without a clear plan risks friction in management, IT, contracts and personnel. Set up a 100-day plan with clear owners that orders the takeover of management, the commercial register and other register changes as well as the change-of-control consents to be obtained.
A structured start secures the value for which you acquired the company.
If plan and deadlines are fixed, the integration is well set up. Pay attention in addition to the completion of the purchase price adjustment via the completion accounts, the ongoing monitoring of the earn-out and the timely notification of any warranty breaches. A later merger or reorganisation also needs legal preparation.
Legal guidance through the first months ensures that no deadline and no claim is lost.
After closing several deadlines run in parallel. Whoever misses the deadline for the completion accounts, a warranty notice or the notification under a W&I insurance can lose claims irretrievably. Get a quick overview of all open points from the purchase contract and order them by deadline.
Have the open points reviewed promptly. A missed deadline can as a rule not be repaired.
The first weeks after closing shape the further course of the integration. A 100-day plan has proven its worth, recording the most important steps with clear owners and deadlines. It orders who takes on which task, from the takeover of management through the register changes to the information of employees and business partners.
Legally, the takeover of management stands at the start. This includes the appointment of the new management, the registration of the changes with the commercial register and the updating of further registers. Only with registration of the changes does the new management act effectively externally. Our focus page on due diligence, whose results guide the integration, offers more depth.
The change-of-control consents to be obtained are important. Many contracts, for example with banks, suppliers or licensors, contain a clause under which a change of ownership requires consent or triggers a right of termination. These points should be identified before closing and worked through immediately afterwards. The concept of the change-of-control clause we explain in the glossary.
With the formal takeover the actual integration begins. IT systems, accounting and reporting must be brought together without disrupting ongoing operations. In parallel, the compliance structures are to be aligned so that the acquired company follows the same standards as the buyer. Contracts with customers and suppliers are reviewed and, where necessary, adjusted or renegotiated.
The employees deserve particular attention. In an acquisition by way of an asset deal there can be a transfer of business that passes the employment relationships to the buyer by operation of law. Which duties are connected with this is shown in the post on the transfer of business in employment law. The cultural integration of two organisations also often decides on success.
Often a corporate restructuring stands at the end of the integration. A merger of the acquired company into the buyer or another reorganisation can simplify structures and lift synergies. Such steps are to be prepared carefully in legal and tax terms so that they do not in turn create new risks.
Alongside the organisational integration the legal mechanisms of the purchase contract keep running. Often the final purchase price is determined only after closing via the completion accounts. The deadlines agreed for this are to be observed precisely, because otherwise the provisional purchase price remains decisive. How this adjustment works is shown in the post on the purchase price adjustment via net debt and working capital.
If part of the purchase price was agreed as an earn-out, it is to be monitored over the success period and cleanly documented. It is precisely here that disputes often arise, because the integration influences the figures decisive for the earn-out. What matters here is dealt with in the post on the earn-out clause.
Finally, warranty claims must be kept in view. If a breach of the warranty catalogue emerges after closing, it is to be notified on time and in the required form. If a W&I insurance exists, the notification to the insurer is to be observed in addition. Which warranties are typical is shown in the post on the warranty catalogue in the SPA.
These workstreams decide on the success of the takeover. Order each one by deadline and owner.
| Workstream | Priority task | Risk if neglected |
|---|---|---|
| Management Appointment and register entry | New management acts effectively externally | Pending representation relationships |
| Change of control Obtain consents | Important contracts remain in force | Termination of central contracts |
| IT and compliance Align systems and standards | Uniform steering and control | Gaps in compliance |
| Price and earn-out Completion accounts and monitoring | Final price correctly determined | Loss of the adjustment or dispute |
| Warranties Observe deadlines and notification | Claims remain enforceable | Claim lapses through missed deadline |
Several of these deadlines run in parallel and independently of one another. A central deadline overview prevents a claim from being lost merely through the passage of time.
Caution with a neglected integration: Whoever loses sight of the deadlines from the purchase contract after closing risks the loss of warranty and adjustment claims and endangers the value of the takeover. Have the open points ordered and monitored early. Booking an initial consultation (72 euro) can quickly bring clarity.
A poorly run integration can undo the success of an otherwise good transaction. If change-of-control consents are not obtained, central contracts risk being terminated. If deadlines for the purchase price adjustment or the warranty notice are missed, valuable claims are lost. And a neglected cultural integration often leads to key staff leaving the company.
These risks can be controlled if the integration is run as a project in its own right from the outset. A clear plan, clear responsibilities and a central deadline overview are the most important tools. An initial assessment of the legal risks is provided by our M&A transaction risk profile.
In practice it is worth thinking of the integration already in the purchase contract. Clear rules on cooperation duties, deadlines and access to information considerably ease the later execution. The phase after closing is thus not an appendix to the transaction but its decisive conclusion.
A 100-day plan orders the first steps after closing with clear owners and deadlines. These include the takeover of management together with the register entry, the change-of-control consents to be obtained, the harmonisation of IT and compliance as well as the information of employees and business partners. The open points from the purchase contract also belong in it.
Many contracts provide that a change of ownership requires the consent of the contract partner or triggers a right of termination. If the necessary consents are not obtained, central contracts with banks, suppliers or licensors can fall away. These clauses should be identified before closing and worked through immediately afterwards.
After closing the deadlines for the completion accounts for the purchase price adjustment, the period for monitoring an earn-out as well as the deadlines for asserting warranty claims typically keep running. If a W&I insurance exists, the notification to the insurer is to be observed in addition. A central deadline overview is indispensable here.
How the purchase price is determined after closing via net debt and working capital.
How a success-based part of the price is monitored and documented.
Which warranties are typical and how claims are notified on time.
Which duties the transfer of the employment relationships brings with it.
When buying a company, structure, review and contract decide. Call us directly or send an email, callback within one business day.
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