Thinking of Buying a Business? Here’s How We Help Protect You:

Buying a business — whether it’s a fast-growing or a mature company — is a big move. And like any big decision, it comes with risks.

You want to make sure that what you’re buying is really worth the price — and that you’re not walking into any hidden surprises. That’s where we come in.

Due Diligence is Just the Beginning:

Once you’ve signed a term sheet or MoU with the seller, the next step is usually a due diligence exercise — think of it as a health check for the business you're about to buy.

Our job (as your lawyer and strategic partner) is to help you uncover potential legal issues/risks/liabilities such as regulatory breaches that could impact the value of the target company. If we find anything serious, you may want to renegotiate the price, ask for specific contractual protections (such as warranties and indemnities that are appropriately wide and for specific issues to be made conditions precedent to closing), or even walk away from the deal in extreme situations.

But even with solid legal documents — warranties, indemnities, and all necessary contractual protections — what happens if the seller can’t (or won’t) pay later on?

Depending on the bargaining power of the parties, we’ll work with you to build in practical safeguards, so that if something does go wrong after completion, you have real remedies:

How We Help You Reduce Post-Completion Risks:

No.	Mechanism	What It Means	How It Protects You (Buyer)	How Common in Malaysia?
1.	Escrow Arrangement	The third-party (often buyer’s lawyer) holds a portion of the purchase price for an agreed period post-completion (for e.g. 2 to 3 years post-completion)	Ensures funds are readily available to cover any post-completion claims	Common in large M&A deals
2.	Retention / Holdback	You hold back a portion of the purchase price for an agreed period post-completion	Gives you direct control over the withheld funds for any post-completion claims	More Common in SME M&A deals
3.	Deferred Payment/ Earn-Out	You pay a contingent additional purchase price based on specified future financial performance of the target company	Protects you from overpaying and motivates the seller to ensure the business keeps performing	Common in both large and SME M&A deals
4.	Guarantee from individual or corporate shareholders (if the seller is a company)	The seller’s shareholders (individual or corporate) personally guarantee any future payments owed to you	Gives you another party to claim against	Occasionally used, especially the seller’s shareholders (individual or corporate) have viable assets
5.	Warranty and Indemnity Insurance	The insurance policy that covers you if there is a breach of warranties or indemnities	Reduce your reliance on the seller, and give both sides more peace of mind	Not yet common in Malaysia

Planning to Buy a Business? Let’s Talk:

Every deal is different — and your risk protection should be too. If you're exploring a potential acquisition, feel free to get in touch.

_________________________________________________________________________________

This article dated 11 July 2025 is contributed by Maple Chieng (Corporate Commercial Lawyer) from Maple Chieng & Co. for general information only and is not a substitute for legal advice.  

Maple Chieng & Co is experienced in providing comprehensive services and support in M&A transactions across a variety of industries such as manufacturing, healthcare, technology, and food and beverage. Please refer our website at https://www.maplechiengco.com/ for further information.

If you have any specific queries or require advice/assistance, please contact us at maple@maplechiengco.com