Key milestones for M&A transaction
• Due diligence A seller may allow a buyer and its advisers to conduct due diligence on the target company/asset up to a cut-off date. This is usually a hectic time for the lawyers conducting the legal due diligence. • Execution of agreement The days leading up to the SPA …
Common issues in M&A transactions
Common issues in M&A transactions: • Guarantor The seller and buyer may want the other party’s obligations under the sale and purchase agreement (SPA) to be guaranteed by another party (usually the holding company or shareholder) if the seller and buyer do not have strong financial means. • Limitation of …
M&A: Change of name
A company which is the subject matter of a sale and purchase transaction may have certain words as part of its name, which are same as the names of other companies incorporated by the same shareholder. Where shares of such company are sold to a buyer who is unrelated to …
M&A: Issues with the assets or company?
A buyer may discover in the course of due diligence that there are issues with the assets or shares which the buyer intends to acquire, such as regulatory approvals required to carry out the business are not in order, non-compliance of conditions of licences or breach of terms of contracts. …
M&A: Does the buyer have financial standing to replace guarantee?
In a sale and purchase of shares, a seller should consider the likelihood the buyer is acceptable to financial institutions as a guarantor to replace the seller, if the target company’s borrowings are secured by substantial guarantees. It is common for the buyer to provide an undertaking in the sale …
Exclusivity period
Parties in M&A transactions may sometimes enter into heads of agreement to set out the key terms and conditions on how they intend the transactions to proceed, prior to the negotiation and execution of sale and purchase agreements. The buyer should request the heads of agreement to include an exclusivity …
It is not just about the money
The consideration for any sale and purchase of shares or business is likely to be one of the most important matters to be agreed between the seller and buyer. However, it should not be-all and end-all. The seller and buyer may need to do certain acts or obtain third parties’ …
Shares sale and purchase: What to do with guarantee?
In a sale and purchase of shares, the buyer will typically require any guarantee given by the target company for the benefit of any company in the seller’s group to be released. If the guarantee has been given for the benefit of a company which will not be wholly owned …
M&A: Seller’s representations and warranties
Some factors to consider when drafting seller’s representations and warranties for a M&A transaction in a sale and purchase agreement: whether the target company is in a heavily regulated sector such as insurance and financial services the value or consideration for the transaction whether the seller has made any representations …
M&A: Categorising vendor’s representations and warranties
One of the most negotiated points in a M&A transaction is the buyer’s remedies for breaches of vendor’s representations and warranties (“Vendor’s WarrantiesV”) in a sale and purchase agreement (“SPA”). The various representations and warranties given by the vendor, if breached, may affect the transaction in varying degree. It may …