Earn-Out: A Postponed Dispute?
An earn-out is often the solution when a buyer and seller cannot agree on price. The seller believes the business is worth more than what the buyer is willing to pay upfront. So, the parties resolve the issue by deferring the portion of the price they cannot agree on, with …
The Disclosure Letter: Why Founders Selling Their Companies Should Not Treat It as an Afterthought
When founders sell their companies, the scope of legal work usually focuses on the share sale and purchase agreement (SPA). The disclosure letter is sometimes treated as secondary to the SPA but it should not have been the case. The disclosure letter sets out the exceptions to the sellers’ representations …
Third-Party Consents in a Share Sale: What Sellers Should Check Before Negotiating
When a company is sold, due diligence is usually conducted by the buyer, not the seller. That means the consents required from regulators, other shareholders, financiers or IP licensors to complete the sale are often only discovered when the buyer’s lawyers identify them during legal due diligence. By then, the …
The Kindness That Stays, 20 Years On
I last saw them in 2007. They are two kind souls who made my years studying in the UK such a beautiful chapter in my life. I have been thinking about them lately and finally reached out after all these years. Whenever I look back on my time in the …
Why M&A Deals Fail
As an M&A lawyer, most of my time goes into the legal documents – drafting and negotiating agreements, representations, warranties, conditions precedent, etc. However, the deals I have seen delayed or aborted were not because of legal documents. A deal was aborted when geopolitical tension escalated while parties were going …
When a Seller is Paid in Shares, Instead of Cash
In an M&A transaction, a buyer which is also a company may offer to pay by issuing its own shares to the seller, instead of paying in cash. How is this different compared to a cash deal? The seller is not just selling. The seller is also “buying” into the …
Declining Sales: Must the Seller Tell the Buyer in an M&A Deal?
A seller signed a share sale and purchase agreement (SPA) to sell shares in two companies. Before completion of the SPA, he found out that sales to two of the companies’ major customers were declining. Should he inform the buyer, or not? He chose not to inform the buyer. In …
How Do You Deal with an Expired Licence in an M&A Deal?
In an M&A deal, the buyer’s lawyer discovered that one of the target company’s licences had expired. The seller’s lawyer tried to down risk the issue and said it could be renewed after completion. The buyer’s lawyer flagged the potential penalties – imprisonment and fines for each day of continuing …
Can You Rely Entirely on CCM Search?
“CCM search has the information.” This was the suggestion given to me as a quick way to complete the corporate information aspect of legal due diligence. There are situations where a search from the Companies Commission of Malaysia (CCM) may be sufficient: where the client understands the limitations of a …
A Little Kindness Goes a Long Way
In a profession where I am constantly analysing, justifying, explaining and negotiating, not for myself, but for clients and team members, every little kindness goes a long way. To the stranger who helped me press the lift button while I was carrying a heavy box, thank you. A client replied …