5. 12. 2020 Od admin Off

Carve Out Agreement

(a) enter into an agreement or a set of related agreements concluded in the context of the ordinary activity for a total amount of more than EUR 250,000; Companies must determine which employees will be part of the carve-out business. This can be a difficult task when a subset of a company`s employees provides critical services for both the company and the carve-out business. Companies need to determine which employees are essential to the operation and growth of the carve-out business and whether the loss of these employees will disrupt their survival. When a company decides to perform the carve-out before selling it, it has the opportunity to resolve problems related to asset allocation/contracts, employment, transaction and entity structure, without soliciting input from potential buyers whose wishes may not match the entity`s strategic vision. This can give companies greater leverage in negotiations and minimize the ability of potential buyers to influence the structure of the carve-out. However, to perform a carve-out before the sale, a company must bear the full cost of the carve-out. The business may incroman unnecessary costs for the creation and operation of the stand-alone business if it is unable to find a buyer. Therefore, a company that decides to enter into a carve-out before the sale of a business should be willing to manage the business as a separate entity (or liquidate the carve-out) if a sale is not completed. After considering these and many other issues, companies should consider whether the carve-out should be done before the sale or at the same time as a sale. Identifying the physical space in which carve-out activity is exploited on a future basis can be a complex problem.

In many cases, a significant portion of the carve-out business is housed in real estate shared with other entities in a company. Businesses should consider whether it is possible to maintain common facilities by entering into lease or sublease agreements with a carve-out buyer or whether it is preferable to transfer the carve-out activity from a common establishment to a separate establishment that can then be sold or leased to a buyer. (c) enter into abnormal or unusual agreements or commitments, including all those that are:i) unlikely to make a profit, (ii) are unusually long-term or cannot be terminated within twenty-four months; (iii) contain a payment period or potential liability risk that differs significantly from the contractual policy of companies acquired at the time of signing, or (iv) would likely have financial consequences after the (initial) duration of the contract; In an equity-carve-out, a company sells shares in an industry.