Seller's Guarantee: Managing the Garantie d'Actif et de Passif (GAP)
Seller's Guarantee: Managing the Garantie d'Actif et de Passif (GAP)
How should the buyer structure the 'Garantie d'Actif et de Passif' (GAP) to protect against post sale liabilities in a French acquisition?
1 Answer
In a French acquisition, the buyer should structure the Garantie d’Actif et de Passif (GAP) by clearly defining which assets and liabilities are covered, setting materiality thresholds, and agreeing on time limits and caps for claims. Often, part of the purchase price is held in escrow to cover potential post-sale issues. Done well, this structure gives a buyer real peace of mind it’s like a safety net that cushions the emotional stress of worrying about hidden debts or claims, so you can focus on running the business instead of constantly looking over your shoulder.