Question 1

Is an MoU, LOI or term sheet binding?

Accepted Answer

That depends on the wording, not the title. The parties may state that commercial terms are non-binding while making confidentiality, exclusivity, costs, governing law or dispute resolution binding. The drafting and the parties' conduct should be reviewed before signature.

Question 2

When should the NDA be signed?

Accepted Answer

Before the party assessing the transaction receives sensitive information. The NDA should cover permitted use, the people who may have access, protection of competitively sensitive information, return or deletion and public statements about the transaction.

Question 3

Is a share acquisition the same as a legal merger?

Accepted Answer

No. In a share acquisition, the target company continues to exist while its owners change. In an asset deal, the buyer acquires the assets identified in the agreement. A merger is a reorganisation governed by Romanian Companies Law, involving universal transfer of assets and liabilities and its own statutory process.

Question 4

What does due diligence cover and how long should it take?

Accepted Answer

The scope depends on the company and the deal. It may cover title to shares, contracts, finance, permits, disputes, employees, intellectual property, data and compliance. Timing depends on volume, data room quality and response speed. A well-prioritised request list is more useful than a standard review disconnected from the decision.

Question 5

Why would the seller conduct due diligence?

Accepted Answer

To find missing documents and issues that may affect price or timing before the buyer does. Vendor due diligence supports remediation, prepares the explanation and disclosure process and helps organise a consistent sale process for several bidders.

Question 6

If we agreed the valuation, did we also agree the price?

Accepted Answer

Not necessarily. A valuation may indicate enterprise value. The amount paid to shareholders may be calculated after adjustments for debt, cash, working capital and other negotiated items. The agreement should contain the definitions, formula and a worked example.

Question 7

Which EBITDA should be used for the price?

Accepted Answer

The EBITDA defined by the parties for the transaction. Discussion may start from reported, normalised or forecast EBITDA, but adjustments for exceptional costs, related-party arrangements, founder remuneration or future savings can materially change the result. The term is insufficient without a formula and reference period.

Question 8

What is the difference between an SPA and an SHA?

Accepted Answer

The SPA governs the sale and transfer of the shares or ownership interests. The SHA governs the relationship between shareholders who remain together after the transaction. In a minority investment, both should be negotiated together because price and control rights form part of the same commercial arrangement.

Question 9

What does a private equity investor usually seek?

Accepted Answer

The fund seeks a return on its investment and an available exit within its investment horizon. It will assess management, the business plan, reporting, control over material decisions, funding, anti-dilution protection and sale mechanisms. Requirements vary with the size of the interest, strategy and risk.

Question 10

Can drag-along and tag-along clauses be copied from a template?

Accepted Answer

That is not prudent. The clauses should state who may trigger them, at which threshold, for what kind of offer, how the price is evidenced and what happens if a shareholder does not cooperate. They must align with the articles and the legal steps required for transfer.

Question 11

Does the seller always receive the full price at closing?

Accepted Answer

No. Part of the price may be held in escrow, deferred, adjusted after closing or made contingent through an earn-out. Each mechanism has a different purpose and risk. The documents should state who controls the funds, when they are released, how results are verified and how differences are resolved.

Question 12

Can signing and closing take place on the same day?

Accepted Answer

Yes, if all conditions are satisfied. If the deal requires merger control clearance, CEISD screening, financing, third-party consents or preliminary measures, the parties sign first and close after satisfying the conditions. The agreement should govern operation of the company and the parties' rights during this period.