Mergers and acquisitions have received increased public attention over the years in Denmark. Despite increased popularity, however, uncertainties regarding the legal position for company buyers remain in Danish law. These uncertainties arise as a result of the caveat emptor principle in the Danish Act on Sale of Goods § 47. According to the principle, the responsibility for potential defects in the target company lies with the buyer, unless the seller has acted fraudulently. The thesis seeks, therefore, to identify current law by using the judicial dogmatic method. The caveat emptor principle is analyzed and compared with seller’s loyal obligation to inform the buyer about the target company.
In relation to mergers and acquisitions, a conﬂict of interests exists, as neither the buyer nor the seller have an incentive to carry the responsibility for potential defects in the target company. By use of economic theory, the thesis seek to clarify how this conﬂict of interests can be solved. Results are that Kaldor-Hicks eﬃciency can be reached if the seller provides a warranty and thereby carry objective liability for any potential defects in the target company.
In order to reduce transaction costs for the buyer, the thesis recommends buyers to invest in a red ﬂag due diligence investigation of the target company early in the process. This gives the buyer a more informative basis for the decision ex ante, which strengthens his negotiation position.
|Uddannelser||Cand.merc.jur Erhvervsøkonomi og Jura, (Kandidatuddannelse) Afsluttende afhandling|