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 โfamilyโ mean immediate family or extended family? Do the parties to the agreements intend for the term โfamilyโ to include adopted children, spouses of siblings and grandparents? 2. Affiliate …
Due Diligence for M&A transactions
๐๐ป๐ณ๐ผ๐ฟ๐บ๐ฎ๐๐ถ๐ผ๐ป ๐๐ต๐ถ๐ฐ๐ต ๐ฏ๐๐๐ฒ๐ฟ ๐ฐ๐ฎ๐ป ๐ด๐ฒ๐ ๐ณ๐ฟ๐ผ๐บ ๐ฑ๐ถ๐ฟ๐ฒ๐ฐ๐๐ผ๐ฟ๐โ ๐ฎ๐ป๐ฑ ๐๐ต๐ฎ๐ฟ๐ฒ๐ต๐ผ๐น๐ฑ๐ฒ๐ฟ๐โ ๐บ๐ถ๐ป๐๐๐ฒ๐/๐ฟ๐ฒ๐๐ผ๐น๐๐๐ถ๐ผ๐ป๐ ๐ผ๐ณ ๐๐ฎ๐ฟ๐ด๐ฒ๐ ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐ โข Whether shares have been properly issued with shareholdersโ approval? โข Has the target company circulated annual financial statements to shareholders? โข Have the directors approved any unusual dividends? โข Where a director is interested in a …
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. …
M&A: Safeguards for buyers
In an M&A transaction, a purchaser may find that well-drafted representations, warranties and indemnities provided by the seller are not particularly helpful if the seller does not have the financial means to pay damages or honour the indemnities. Four ways to avoid this: 1. The seller to provide bank guarantee …
Corporate law: More than just business
I decided early in my career that I would not go into practice areas which are more โpersonalโ. Corporate laws seemed to be a more neutral choice. I probably got this wrong. *** One of the transactions I was involved in gave me a different insight. The vendors sold their …
M&A: Plan ahead for signing
In M&A transactions, when parties are busy negotiating the terms, planning for the signing of the transaction agreements may be the last thing on their mind. Plan ahead for signing. 1. What needs to be delivered to the counterparty upon execution of the transaction agreements? 2. Ensure the resolutions which …
A lawyer’s job
In M&A transactions, lawyers are naturally inclined to draft and negotiate agreements that put our clients in a strong legal position. That is our job. For a buyer, it may mean providing for the following in the sale and purchase agreement (SPA): – solid representations and warranties by the seller …
M&A: Term sheet in M&A transaction
๐๐ด๐ฆ ๐ข ๐ต๐ฆ๐ณ๐ฎ ๐ด๐ฉ๐ฆ๐ฆ๐ต ๐ง๐ฐ๐ณ ๐ต๐ฉ๐ช๐ด A term sheet is used in M&A transaction to set out the key commercial terms such as price, basis for price adjustment, earn out, profit guarantee and execution of new employment agreements with key employees of the target entity. The term sheet may be …
M&A: Certainty of terms
It drives me a bit crazy sometimes when parties to transaction agreements request for ambiguous provisions to be included into agreements. By that I mean provisions which beg one or a combination of the following questions: -What needs to be done to achieve the desired result? -Who is responsible? -How …