walslaw, Amsterdam boutique law firm
ENNL

Divestments

A divestment is rarely determined by price alone. Certainty of execution, the warranty package and the position after closing matter just as much to a seller leaving the business. We advise private equity sellers, entrepreneurs, founders, family-owned businesses and corporates on Dutch divestments, from quiet bilateral exits to fully marketed auctions. The legal work begins long before bidders arrive, with pre-sale cleanup, vendor due diligence, data room discipline and an SPA architecture that holds firm under negotiating pressure.

When clients call us

  • You are considering a sale within the next six to 24 months
  • A potential buyer has approached you directly and you want to respond in a structured way
  • Your business needs pre-sale legal cleanup before going to market
  • You are running a controlled auction and need counsel who keeps the process tight
  • An earn-out, escrow or deferred consideration needs sharper drafting

Key legal & commercial issues

I.

Where value is created (and lost) on sell-side

Most of the value on a sell-side mandate is created before the SPA reaches the table. A clean corporate structure, properly documented consents, a well-ordered data room and a credible disclosure letter reduce the scope for buyers to reopen price during due diligence.

The negotiation itself is equally important. Warranty caps, claim periods, materiality thresholds, conduct-of-claims provisions and the interaction with W&I insurance determine how much residual liability the seller retains after closing.

II.

Process discipline

Whether the sale is a bilateral negotiation or a controlled auction, process discipline is central to a successful exit. Clear process letters, bidder qualification, controlled Q&A and a disclosure regime that is consistent across bidders are the levers that maintain competitive tension and protect value through to signing.

III.

Protecting the seller after closing

  • Defined and capped warranty exposure
  • Specific indemnities for known issues, rather than open-ended carve-outs
  • Sensible knowledge qualifiers and disclosure mechanics
  • Bounded transitional services, earn-outs and post-closing covenants
  • Clear governance over W&I claims, escrow releases and any deferred consideration

What we advise on

What we advise on

  • Pre-sale legal cleanup and structural readiness
  • Vendor legal due diligence and red-flag reporting
  • Data room build, Q&A management and disclosure regime
  • Process design for controlled auctions and bilateral sales
  • SPA, disclosure letter and ancillaries from the seller's perspective
  • W&I insurance coordination and policy alignment
  • Management rollover, retention and incentive structures
  • Post-closing protection: indemnities, escrow, conduct-of-claims

Typical documents and deliverables

Typical documents and deliverables

  • Share purchase agreement and disclosure letter (sell-side draft)
  • NDAs, process letters and information memorandum (legal sections)
  • Vendor legal due diligence report and disclosure index
  • W&I insurance policy review and alignment
  • Escrow agreement and post-closing covenants
  • Transitional services and reverse-transition agreements
  • Notarial deed of share transfer

How we support the process

How we support the process

  1. 1

    A pre-sale legal readiness review covering structure, consents and the shareholders' register

  2. 2

    Vendor due diligence and a data room built to the disclosure regime it will have to support

  3. 3

    Process design settled with the corporate finance and tax advisors before bidders are approached

  4. 4

    Drafting and negotiation of the SPA and the disclosure letter from the seller's side

  5. 5

    Signing, closing and follow-through on escrow, earn-out and post-closing covenants

Questions clients ask before instructing us

Questions clients ask before instructing us

When should we start preparing for a sale?
Preparation should begin sufficiently early to allow the seller to clean up the corporate structure, regularise intra-group arrangements, resolve dormant entities, put missing contracts on paper, obtain relevant change-of-control consents, organise the shareholders' register and formalise management incentives. Unresolved items can become diligence findings, points of negotiation or causes of delay.
Can we keep the sale confidential?
Confidentiality can largely, though not perfectly, be maintained. NDAs, a phased data room, clean teams for competitively sensitive information and code-named process documents all help. The pressure points are predictable: works council consultation widens the circle of people who know, key customers and lenders whose change-of-control consents are required will find out, regulatory filings with the ACM can become public, and management, once incentivised, can become a leak risk. Works council members and any experts they engage can be bound to confidentiality under the WOR, provided the scope and the duration of that obligation are stated clearly. We advise clients to plan the communication sequence at the same time as the transaction timetable, with a holding statement ready. In a controlled auction, the process design itself is a confidentiality tool, through fewer bidders, staged disclosure and enforceable standstill and non-solicit undertakings in the NDA.
How much warranty exposure does a Dutch seller normally retain?
Without insurance, Dutch mid-market practice sits at 10 to 25 per cent of the purchase price for business warranties, with a 12 to 24 month claims period, a de minimis of around 0.1 per cent and a basket of around 1 per cent. Fundamental warranties on title, capacity and shares are usually uncapped or capped at the full price and run for five to seven years, and tax warranties follow the statutory assessment period, in practice five years plus. With W&I in place, the seller's cap drops to a nominal amount and the insurer carries the rest, although the policy exclusions, the retention and the claim mechanics can leave specified risks with the seller or the buyer, and the seller almost always retains liability for fraud and for specifically excluded matters.
Do we have to use W&I insurance?
W&I insurance is not mandatory, although on a competitive Dutch process bidders may expect it to be available. W&I can allow the seller to limit liability to a nominal amount and achieve a near-clean exit, which may matter to funds facing distribution deadlines and to private sellers who do not want escrow money tied up. Underwriting requires appropriate due diligence and can produce exclusions that the seller may still have to cover directly. Where the seller retains risk, the question becomes escrow versus deferred consideration versus a specific indemnity, and each has different consequences for the seller's balance sheet.
What does the works council need to do on a sale?
The works council has an advisory right under the WOR on a proposed transfer of control. Depending on the structure, a works council on the seller's or the buyer's side may also have an advisory right. It must be consulted at a point where its advice can still have a material influence on the decision, which often means before signing. The council is provided with the transaction rationale, the identity and intentions of the buyer, the consequences for employment and the measures proposed. Councils rarely block transactions, but they can delay them. Where the decision taken is not in accordance with the council's advice, implementation must be suspended for one month, during which the council can appeal to the Enterprise Chamber. Confidentiality obligations apply to council members although the risk of leakage remains, which is why sequencing matters. Depending on the size of the business, the SER Merger Code may also require the trade unions to be informed before agreement is reached.
How is vendor due diligence different from buyer due diligence?
Buyer due diligence identifies issues that may affect the price. Vendor due diligence identifies those issues first, so that the seller controls when and how they surface. A VDD report is prepared for the seller and may be made available to bidders on agreed reliance terms. Its scope, addressees, reliance cap and exclusions should be agreed before release. It can level the information field, shorten the process, and allow the seller to pre-position difficult findings with a fix or an explanation rather than leaving a bidder to use them as leverage in week six. It also disciplines the data room. Full VDD is usually proportionate on processes above roughly EUR 25 million or with several bidders, and below that a targeted internal review of the five or six issues a buyer is certain to find is usually the better investment.

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