M&A & investment
A share deal changes the ownership of a company while the company generally remains the holder of its assets, contracts and liabilities. We help buyers and sellers identify what that continuity means for the transaction.
Scope of our advice
Due diligence covers legal title, historic liabilities, governance, financing, employment, IP and regulatory matters. Change-of-control clauses may still trigger consent or termination rights. Transfers of German GmbH shares are subject to notarial requirements.
What needs attention
Check the ownership chain and any encumbrances before negotiating completion mechanics. The agreement must distinguish economic risk transfer from the legal transfer of the shares.
Ownership transfer and retained company liabilities
In a share purchase, the target generally continues as the same legal person. This can preserve contractual relationships but also leaves historic liabilities inside the acquired company. Due diligence therefore examines corporate title, financing, tax, employment, regulatory matters and material contracts. Change-of-control clauses may require consent even though the contracting company itself is unchanged. The seller’s ownership and authority must be checked, including any pledges, pre-emption rights or restrictions in the articles.
How the legal work is organised
The agreement should distinguish the transfer mechanism from the allocation of economic risk. Purchase price adjustments, locked-box protections, warranties and specific indemnities answer different questions. We examine how disclosures qualify protection, which claims procedures apply and whether the seller can meet a later claim. Formal requirements for German GmbH share transfers and related obligations must be addressed in the execution plan. Between signing and completion, operating covenants should preserve value without improperly transferring control before required approvals.
Four practical examples
Illustrative scenarios explaining typical legal issues; these are not statements about specific client mandates.
Encumbered shares
A bank holds security over the target shares. We arrange release mechanics that fit payment and transfer at completion.
Practical approach. Trace ownership through the relevant transfer and capital measures, not only the latest group chart. Any discrepancy should be resolved before the buyer relies on warranties as its sole protection.
Customer consent
A key customer can terminate on a change of control. We assess consent strategy and its treatment as a closing condition.
Practical approach. The consent analysis should identify the consequence of a control change, the notice process and timing. A seemingly routine supplier or financing agreement can be central to the target’s ongoing value.
Historic liability
Due diligence uncovers a disputed tax period. We coordinate specialist review and negotiate a specific allocation of the risk.
Practical approach. A specific indemnity should define the identified exposure, claim handling and recovery mechanics. Consider security or insurance where a contractual promise would otherwise depend on uncertain seller resources.
Minority seller
Not all shareholders agree to sell. We review the articles and shareholder agreement before relying on any drag-along mechanism.
Practical approach. Check the minority seller’s title, transfer rights and participation obligations. The agreement should explain which warranties are given individually, how liability is limited and how proceeds are allocated among the sellers.
Preparing the first discussion
Key documents include the articles, shareholder list, historic transfer records, security documents, shareholder agreements and contracts with change-of-control provisions. Prepare a debt and cash schedule and identify payments or distributions made to sellers or related parties. The quality of corporate title evidence is important even where the commercial terms of the acquisition are agreed.
Related expertise
Buy or sell a business · Asset deals · Due diligence
Discuss your business matter
Tell us which parties and countries are involved, what you want to achieve and whether a deadline is approaching. We will clarify the scope, the appropriate legal team and the fee arrangements before work begins.
Reference: German Limited Liability Companies Act. English translations of German legislation may lag behind the authoritative German text. Application depends on the facts and the relevant current law.