{"id":44286,"date":"2017-08-01T04:13:36","date_gmt":"2017-08-01T02:13:36","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/more-cash-at-exit-through-warranty-insurance\/"},"modified":"2017-08-01T04:13:36","modified_gmt":"2017-08-01T02:13:36","slug":"more-cash-as-you-exit-through-warranty-insurance","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/more-cash-as-you-exit-through-warranty-insurance\/","title":{"rendered":"More cash at exit through warranty insurance"},"content":{"rendered":"

Dr. Volker Jung\u00adhanns<\/strong> \u2014 Attor\u00adney at Law and Part\u00adner Salans LLP, Frankfurt\/Main<\/p>\n","protected":false},"excerpt":{"rendered":"

Private equity funds are tempo\u00adrary inves\u00adtors. A private equity fund alre\u00adady plans its exit when ente\u00adring into the finan\u00adcing of a port\u00adfo\u00adlio company. Such an exit is regu\u00adlarly achie\u00adved by selling the invest\u00adment to a stra\u00adte\u00adgic buyer(trade sale<\/em>) or another private equity fund(secon\u00addary buyout<\/em>), or alter\u00adna\u00adtively via an IPO. With regard to the exit, a distinc\u00adtion must be made between the sale of a port\u00adfo\u00adlio company(single exit<\/em>) and the sale of all or the last port\u00adfo\u00adlio company, which ulti\u00adm\u00adately leads to the closure of the fund.<\/strong><\/p>\n

The top maxim of a private equity inves\u00adtor is: \u201cCash is King\u201d. Only what the private equity fund earns on exit (i.e. the purchase price that is available to it in real terms) can be retur\u00adned to its inves\u00adtors. The perfor\u00admance of the private equity fund is ther\u00ade\u00adfore measu\u00adred by the cash flow. Measu\u00adres that lead to an impro\u00adve\u00adment in cash flow at exit ther\u00ade\u00adfore always lead to an impro\u00adve\u00adment in perfor\u00admance. There is an infor\u00adma\u00adtion gap at each exit. The selling private equity fund regu\u00adlarly had full infor\u00adma\u00adtion about the busi\u00adness deve\u00adlo\u00adp\u00adment of the port\u00adfo\u00adlio company to be sold over a longer period of time. Howe\u00adver, it should be noted that the private equity fund itself is usually not invol\u00adved in the day-to-day busi\u00adness and must rely on the infor\u00adma\u00adtion provi\u00added by the manage\u00adment, which normally chan\u00adges sides, when selling the port\u00adfo\u00adlio company.<\/p>\n

On the other hand, the buyer regu\u00adlarly recei\u00adves only a limi\u00adted insight into the port\u00adfo\u00adlio company to be acqui\u00adred as part of the due dili\u00adgence process. Howe\u00adver, it should be added that, depen\u00adding on the scope and time of the due dili\u00adgence, this insight may be more compre\u00adhen\u00adsive than the level of know\u00adledge at the selling private equity fund.<\/p>\n

This infor\u00adma\u00adtion gap gives rise to certain provi\u00adsi\u00adons in the company purchase agree\u00adment which have long been stan\u00addard and are inten\u00added to compen\u00adsate for the buyer\u2019s infor\u00adma\u00adtion deficit:<\/p>\n