Cash free and debt free agreement

In the context of company acquisitions/sales, a cash free/debt free clause is incre­asingly being included in the SPA (Sales and Purchase Agree­ment) in Germany as well. It regu­la­tes the finan­cial resour­ces with which the company is trans­fer­red at the agreed purchase price. A buyer pays a purchase price X with XY cash on hand and XY finan­cial liabi­li­ties. The purchase price is thus more precis­ely defi­ned and varia­ble. If it turns out that the cash posi­tion at the report­ing date was higher than defi­ned in the SPA, the purchase price is increased by this diffe­rence; if it subse­quently turns out that the finan­cial liabi­li­ties at the report­ing date were higher than defi­ned in the SPA, the purchase price is redu­ced accor­din­gly. Instead of the term cash free and debt free regu­la­tion, the term “net debt” clause or “net debt” defi­ni­tion is also used.