Sample Term Sheet: Acquisition of a Hong Kong Accounting Firm
Parties
Buyer: [Buyer's Name]
Seller: [Seller's Name]
Date: [Date]
1. Purchase Price and Terms
Purchase Price: [Total Purchase Price] in [Currency]
Payment Terms:
[Upfront Payment]
[Earn-out Provisions] (if applicable)
[Deferred Payments] (if applicable)
Closing Adjustment: [Mechanism for adjusting the purchase price based on the seller's working capital, debt, and other factors]
2. Assets and Liabilities
Assets:
Goodwill
Client List
Intellectual Property (e.g., trademarks, copyrights)
Equipment
Inventory
Other Assets
Liabilities:
Accounts Payable
Accrued Expenses
Taxes
Debt
Other Liabilities
3. Due Diligence
Due Diligence Period: [Duration of due diligence period]
Access to Information: Seller will provide Buyer with access to all relevant financial, operational, and legal documents.
Confidentiality: Buyer will maintain the confidentiality of all information obtained during due diligence.
4. Representations and Warranties
Seller Representations:
Accuracy of financial statements
Compliance with laws and regulations
Ownership of assets
No material litigation or claims
Employee relations
Client relationships
Buyer Representations:
Financial condition
Ability to complete the transaction
No material litigation or claims
5. Covenants
Pre-Closing Covenants:
Seller will operate the business in the ordinary course of business
Seller will obtain necessary consents and approvals
Buyer will obtain necessary financing
Post-Closing Covenants:
Seller will provide assistance with the transition
Buyer will operate the business in compliance with applicable laws and regulations
6. Conditions to Closing
Buyer Conditions:
Completion of due diligence
Receipt of financing
Obtaining necessary regulatory approvals
Seller's compliance with representations and warranties
Seller Conditions:
Buyer's compliance with representations and warranties
Payment of purchase price
Transfer of assets
Assumption of liabilities
7. Termination Rights
Termination Rights: Either party may terminate the agreement if the closing does not occur by a specified date.
8. Indemnification
Indemnification: The Seller will indemnify the Buyer for losses arising from breaches of representations, warranties, or covenants.
9. Dispute Resolution
Dispute Resolution: [Specify the method for resolving disputes, such as negotiation, mediation, or arbitration]
Option 1: Negotiation and Mediation
"Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be first resolved through good faith negotiations between the Parties. If the Parties are unable to resolve the dispute within [number] days of providing written notice of the dispute to the other Party, the dispute shall be referred to mediation in accordance with the Rules of the Hong Kong International Arbitration Centre (HKIAC)."
Option 2: Arbitration
"Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of the Hong Kong International Arbitration Centre (HKIAC). The arbitration shall be conducted in English and the seat of the arbitration shall be Hong Kong."
Option 3: Litigation
"Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be exclusively settled by the courts of Hong Kong."
10. Governing Law and Jurisdiction
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.
Jurisdiction: Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of the Hong Kong International Arbitration Centre (HKIAC). The arbitration shall be conducted in English and the seat of the arbitration shall be Hong Kong.
11. Confidentiality
Confidentiality: Both parties will maintain the confidentiality of all non-public information disclosed during the negotiation and due diligence process.
12. Entire Agreement
Entire Agreement: This agreement constitutes the entire understanding between the parties and supersedes all prior or contemporaneous communications, representations, or agreements.
13. Notices
Notices: All notices must be given in writing and addressed to the parties at their specified addresses.
14. Survival
Survival: Certain representations, warranties, and covenants will survive the closing.
15. Assignment
Assignment: Neither party may assign this agreement without the prior written consent of the other party.
16. Amendments and Waivers
Amendments and Waivers: Any amendments or waivers must be in writing and signed by both parties.
17. Execution
Execution: This agreement is executed by authorized representatives of both parties.
Additional Considerations:
Intellectual Property: Ensure proper transfer and protection of intellectual property rights.
Regulatory Compliance: Address any regulatory requirements specific to the acquisition of an accounting firm in Hong Kong.
Employee Matters: Consider employee contracts, transfer of employment, and potential severance payments.
Client Relationships: Address how client relationships will be handled post-acquisition.
Tax Implications: Consult with tax professionals to understand the tax implications of the transaction.
How Bestar Can Help in a Hong Kong Accounting Firm Acquisition
Sample Term Sheet - Acquisition of an Accounting Firm
Bestar can provide invaluable expert advice throughout the acquisition process, including:
Due Diligence: Conducting thorough legal due diligence to identify potential risks and liabilities.
Negotiation: Assisting in negotiating the terms of the acquisition agreement, including purchase price, payment terms, representations and warranties, covenants, and dispute resolution mechanisms.
Regulatory Compliance: Ensuring compliance with applicable laws and regulations, such as the Companies Ordinance, the Securities and Futures Ordinance, and tax laws.
Contract Drafting: Preparing and reviewing key documents, such as the purchase agreement, shareholders' agreement, and employment agreements.
Risk Mitigation: Identifying and addressing potential legal risks, such as antitrust issues, intellectual property disputes, and employment law concerns.
Post-Acquisition Integration: Advising on post-acquisition integration matters, including employee transfers, client transitions, and regulatory filings.
Valuation: Assessing the fair market value of the target accounting firm.
Financial Modeling: Developing financial models to project the future financial performance of the combined entity.
Tax Structuring: Advising on tax-efficient structures for the transaction, including the use of share exchanges or asset purchases.
Due Diligence: Conducting financial due diligence to assess the target firm's financial health and identify potential risks.
Post-Acquisition Integration: Advising on post-acquisition financial integration, including budgeting, forecasting, and financial reporting.
Bestar can provide comprehensive guidance and support to ensure a successful acquisition of a Hong Kong accounting firm.
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