Closing takes place once all closing conditions are met. These include, for example, clearance by the German Federal Cartel Office (Bundeskartellamt), consent from banks or key contract partners, and foreign investment screening under the German Foreign Trade and Payments Ordinance (AWV). The parties confirm that the conditions have been met in a closing memorandum.
For the seller, closing is the day the money flows. From that moment, the buyer bears entrepreneurial responsibility. With closing accounts, the purchase price is calculated as at this date and adjusted later. With the locked box model, by contrast, it is already fixed.
German merger control applies under § 35 GWB if the companies involved have combined worldwide turnover of more than €500 million and, in Germany, one company has turnover of more than €50 million and another more than €17.5 million. Until clearance, a prohibition on completion applies under § 41 GWB. A closing before clearance is invalid and can trigger fines.
Example
Hypothetical example: A group with €900 million turnover, of which €120 million is in Germany, buys a mid-sized company with €25 million domestic turnover. All thresholds are exceeded, so notification is mandatory. After four weeks, the Federal Cartel Office grants clearance, and closing takes place one week later.
Sources
- Gesetz gegen Wettbewerbsbeschränkungen (GWB), § 35 Geltungsbereich der Zusammenschlusskontrolle, Bundesministerium der Justiz / gesetze-im-internet.de
- Gesetz gegen Wettbewerbsbeschränkungen (GWB), § 41 Vollzugsverbot, Entflechtung, Bundesministerium der Justiz / gesetze-im-internet.de
- Außenwirtschaftsverordnung (AWV), § 55 Prüfung des Erwerbs inländischer Unternehmen, Bundesministerium der Justiz / gesetze-im-internet.de