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Business Acquisition Agreement
I need a business acquisition agreement for the purchase of a mid-sized manufacturing company, including terms for asset transfer, employee retention, and a non-compete clause for the seller. The agreement should also outline the payment structure, including an initial deposit and subsequent installments, and include provisions for due diligence and regulatory approvals.
What is a Business Acquisition Agreement?
A Business Acquisition Agreement spells out the terms and conditions when one company buys another in Germany. This legally binding contract, governed by German corporate law (Unternehmenskaufvertrag), covers everything from the purchase price and payment terms to warranties and representations about the target company's condition.
Under German law, these agreements must address specific requirements like employee rights protection (Arbeitsrecht) and merger control notifications to the Bundeskartellamt. The document typically includes detailed sections on asset transfers, intellectual property rights, and post-closing obligations. Companies often work with specialized M&A lawyers to ensure compliance with both German Civil Code (BGB) and EU regulations.
When should you use a Business Acquisition Agreement?
Use a Business Acquisition Agreement when your company plans to purchase another business in Germany, especially during the early stages of serious negotiations. This critical document becomes essential once both parties have agreed on basic terms through initial discussions or a letter of intent, but before any money changes hands or assets transfer.
Getting this agreement in place early helps prevent costly disputes and ensures compliance with German merger control laws. It protects both buyer and seller by clearly defining what's being sold, the purchase price, any conditions that must be met, and how to handle potential problems discovered after closing. The sooner you start drafting it, the smoother your acquisition process will go.
What are the different types of Business Acquisition Agreement?
- Acquisition Letter Of Intent: The initial, non-binding agreement that outlines key terms before the full Business Acquisition Agreement. Often used in German M&A deals to establish preliminary understanding while due diligence continues.
- Asset Purchase Agreement: Focuses specifically on buying selected company assets rather than shares, common in German Mittelstand transactions.
- Share Purchase Agreement: Used when acquiring ownership through stock transfer, particularly relevant for GmbH and AG corporate forms.
- Merger Agreement: Combines two companies into one legal entity, requiring specific provisions under German transformation law (Umwandlungsgesetz).
Who should typically use a Business Acquisition Agreement?
- Acquiring Companies: Usually German GmbHs or AGs looking to expand through strategic purchases, represented by their management board (Vorstand) or managing directors (Gesch盲ftsf眉hrer)
- Target Companies: The business being sold, including their shareholders and key management who must provide warranties
- M&A Lawyers: Specialized attorneys who draft and negotiate the agreement, ensuring compliance with German corporate law
- Corporate Advisors: Tax consultants, accountants, and business valuators who support due diligence and deal structuring
- Works Councils: Employee representatives who must be consulted under German co-determination laws when the deal affects workforce
How do you write a Business Acquisition Agreement?
- Due Diligence Results: Gather comprehensive financial statements, contracts, employee data, and intellectual property details of the target company
- Purchase Structure: Determine if you're buying shares or assets, and outline the exact scope of what's included
- Key Terms: Document the agreed purchase price, payment terms, and any earn-out provisions
- Regulatory Checks: Verify if German merger control thresholds apply and prepare necessary competition law filings
- Employee Matters: List all employment contracts, benefits, and works council agreements that transfer with the business
- Digital Template: Use our platform to generate a legally compliant agreement that incorporates all these elements automatically
What should be included in a Business Acquisition Agreement?
- Party Details: Full legal names and addresses of buyer and seller, including corporate form (GmbH, AG, etc.)
- Purchase Object: Clear description of assets or shares being transferred, including company register details
- Price Structure: Purchase price, payment terms, and any adjustments under German accounting principles (HGB)
- Warranties: Seller representations about company condition, compliance with German law, and disclosure accuracy
- Employee Provisions: Transfer terms under 搂 613a BGB and works council agreements
- Closing Conditions: Required regulatory approvals, especially merger control clearance
- Governing Law: Usually German law (deutsches Recht) with specific court jurisdiction
What's the difference between a Business Acquisition Agreement and an Asset Purchase Agreement?
A Business Acquisition Agreement differs significantly from an Asset Purchase Agreement in German corporate transactions. While both facilitate business transfers, they serve distinct purposes and carry different legal implications under German law.
- Scope of Transfer: Business Acquisition Agreements cover the entire company transfer, including shares, contracts, and goodwill, while Asset Purchase Agreements focus only on specific assets, excluding company liabilities or shares
- Legal Structure: Business acquisitions typically transfer ownership at the corporate level (Unternehmenskauf), while asset purchases handle individual items under property law (Sachkauf)
- Employee Rights: Business acquisitions automatically transfer all employment relationships under 搂 613a BGB, but asset deals may limit which employees transfer
- Tax Implications: Business acquisitions often qualify for more favorable tax treatment under German corporate tax law, compared to asset deals which may trigger individual asset taxation
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