M&A: How can a buyer address issues discovered during the due diligence
In an M&A transaction, how can a buyer address issues discovered during the due diligence conducted on the target? There are a few ways to address an issue: 1. Get an indemnity from the seller. 2. Reduce purchase consideration. 3. Carve-out or ring fence the risk and liability arising from …
M&A: Key points to look out for in contracts entered by target companies
In an M&A transaction, it is important for a buyer to understand the contractual rights and obligations binding the target company under the contracts entered by the target company. However, the contracts may be voluminous and it is easy to get drowned in the details. Some key points to look …
All in a day’s work for a corporate lawyer
Closing an M&A transaction, finalising agreements for execution and working on a fund raising exercise. All happening at the same time. I couldn’t put my life on pause while I am running corporate exercises. It means driving hundreds of km back to hometown when a family member requires medical attention. …
The ups and downs of being an M&A lawyer
I didn’t seek out to be an M&A lawyer. It is a part of my work and I find myself gravitate towards this practice area more than other corporate work that I have done: What I like being an M&A lawyer: 1. The work is (usually) intellectually stimulating. See last …
Don’t follow precedents blindly
In M&A transactions, whenever I see the following in a draft transaction document, I guess the person preparing the draft has been copying from precedents without checking: 1. The draft refers to authorised share capital although the concept of authorised share capital for a Malaysian company has been abolished since the …
Have clear definitions in M&A agreements
In M&A transactions, the following terms are open to interpretation if used in transaction agreements without being defined: 1. Family Does “family” mean immediate family or extended family? Do the parties to the agreements intend for the term “family” to include adopted children, spouses of siblings and grandparents? 2. Affiliate …
Due Diligence for M&A transactions
𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝘄𝗵𝗶𝗰𝗵 𝗯𝘂𝘆𝗲𝗿 𝗰𝗮𝗻 𝗴𝗲𝘁 𝗳𝗿𝗼𝗺 𝗱𝗶𝗿𝗲𝗰𝘁𝗼𝗿𝘀’ 𝗮𝗻𝗱 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀’ 𝗺𝗶𝗻𝘂𝘁𝗲𝘀/𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀 𝗼𝗳 𝘁𝗮𝗿𝗴𝗲𝘁 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 • Whether shares have been properly issued with shareholders’ approval? • Has the target company circulated annual financial statements to shareholders? • Have the directors approved any unusual dividends? • Where a director is interested in a …
Lord of the Rings and lawyering
“𝘞𝘩𝘦𝘳𝘦 𝘥𝘪𝘥 𝘺𝘰𝘶 𝘨𝘰 𝘵𝘰, 𝘪𝘧 𝘐 𝘮𝘢𝘺 𝘢𝘴𝘬?’ 𝘴𝘢𝘪𝘥 𝘛𝘩𝘰𝘳𝘪𝘯 𝘵𝘰 𝘎𝘢𝘯𝘥𝘢𝘭𝘧 𝘢𝘴 𝘵𝘩𝘦𝘺 𝘳𝘰𝘥𝘦 𝘢𝘭𝘰𝘯𝘨. 𝘛𝘰 𝘭𝘰𝘰𝘬 𝘢𝘩𝘦𝘢𝘥,’ 𝘴𝘢𝘪𝘥 𝘩𝘦. 𝘈𝘯𝘥 𝘸𝘩𝘢𝘵 𝘣𝘳𝘰𝘶𝘨𝘩𝘵 𝘺𝘰𝘶 𝘣𝘢𝘤𝘬 𝘪𝘯 𝘵𝘩𝘦 𝘯𝘪𝘤𝘬 𝘰𝘧 𝘵𝘪𝘮𝘦?’ 𝘓𝘰𝘰𝘬𝘪𝘯𝘨 𝘣𝘦𝘩𝘪𝘯𝘥,’ 𝘴𝘢𝘪𝘥 𝘩𝘦.” I have always liked the exchange above between Thorin and Gandalf from J.R.R. Tolkien’s …
Binding clauses for term sheet
The first document that I usually draft for an M&A transaction is the term sheet (sometimes referred to as the letter of intent/ heads of agreement/ memorandum of understanding). The purpose of a term sheet is to serve as a framework for drafting the definitive sale and purchase agreement. A …
M&A: What to include in condition precedent clause
In a sale and purchase agreement for an M&A transaction, a condition precedent is a condition which must be fulfilled in order for the sale and purchase to proceed. A clearly drafted condition precedent clause should include the following: 1. What is the desired outcome/condition precedent to be fulfilled? 2. …