Negotiations of a share sale agreement in the IT industry
We secured the seller's interests in a share sale agreement worth 450,000 PLN. We eliminated risky indemnity clauses.
We helped the shareholders of DevLogic Sp. z o.o. finalize the sale of shares worth 450,000 PLN. Our task was to remove provisions that could burden the sellers after signing the agreement.
The challenge
The client received from the buyer the first draft of the agreement, which contained extremely broad seller liability for future code errors. The provisions were formulated in an unlimited timeframe, which posed a direct threat to the shareholders' private assets.
In the preliminary audit process, we identified 17 provisions that were inconsistent with the market standard for transactions of this scale. The company owners were concerned about the risk of contractual penalties, which in a black-scenario could consume a significant part of the transaction profit.
Our approach
The Ambicja i Prawo Consulting team approached the matter directly. We started with a thorough revision of financial attachments and software development history to precisely define the scope of warranty liability.
We focus on the specifics. We prepared counter-proposals for provisions that limited liability to 12% of the sale price and set the warranty duration for a period of 14 months. For 6 weeks, we conducted negotiations with the buyer's legal department to work out a joint position.
The solution
We negotiated a so-called 'cap' (maximum liability) and safe time limits for claims due to hidden defects. We introduced provisions on the necessity of written notification of a defect within 7 days of its discovery, which drastically limited room for abuse.
The agreement was signed in July 2024 without any additional promissory note securities that the buyer had initially insisted on. The rules are clear to us — the client received the final version of the document, which protects his profits without exposing him to unforeseen costs in the future.
Results
The transaction was closed on time, and the client felt real relief thanks to the elimination of the risk of unlimited asset liability.
Timeline
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May 2024Initial analysis of the sale agreement draft
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June 2024Negotiations of warranty provisions
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July 2024Signing the final agreement at the notary
"I was skeptical about the changes in the contract, but after the Ambicja i Prawo team explained 17 risky points, the matter became clear. Finally, we saved a lot of nerves."