PEINVEST
A portion of the purchase price held by a neutral third party for a specified period after closing to cover potential indemnification claims. Escrow accounts protect the buyer against breaches of representations and warranties discovered after the transaction closes.
Statements of fact and promises made by the seller in an acquisition agreement regarding the condition and attributes of the business being sold. Reps and warranties cover areas such as financial statements, legal compliance, employee matters, and material contracts.
A contractual provision in which the seller of a business receives additional future payments contingent on the company achieving specified performance targets after the acquisition. Earnouts help bridge valuation gaps between buyers and sellers.
The thorough investigation and analysis of a target company conducted before completing an acquisition. Due diligence typically covers financial, legal, commercial, operational, and environmental aspects to identify risks and validate the investment thesis.