Define terms in M&A SPA to avoid dispute
Today’s post is on some of the terms used in sale and purchase agreements for M&A transactions. The following terms are open to interpretation if used in agreements without being defined: 1. Family Does “family” mean immediate family or extended family? Do the parties to the agreements intend for the …
All in a day’s work of a M&A lawyer
One of the M&A negotiations I had took place during a fire drill. We were not notified in advance that there would be a fire drill in our office building that day. My colleague and I were in the midst of a con call when the fire alarm went off. …
Representations and warranties seller should avoid
Today’s post is on some of the representations and warranties a seller should avoid giving in a M&A transaction. 1. Representations and warranties about the future The seller should avoid providing representations and warranties in respect of future events if there is uncertainty about the future. Further, after the seller …
How buyers could secure claims in M&A transactions
Today’s post is on how a buyer may “secure” warranty and indemnity claims in M&A transactions. If the buyer is unable to recover damages from the seller for any warranty or indemnity claim due to the seller’s financial position, well-drafted clauses would not be much use to the buyer. If …
Key milestones for M&A transactions
A question was posed on a M&A transaction I was working on. Can the sale and purchase agreement be completed soon after the legal due diligence on the target company is completed? The short answer is “It depends”. There are things which are within lawyers’ control such as when draft …
M&A: Limitation of liability
In M&A transactions, whenever the issue of limitation of liability is raised, I know I would be in for a lengthy negotiation. A seller would typically want to limit the seller’s liability under the sale and purchase agreement. However, the parties may decide not to include limitation of liability clause …
M&A: How to verify share title
In an M&A transaction relating to a private company, how does a buyer (or the buyer’s advisers) verify that the seller has the legal and beneficial title to the shares which the seller is selling (“Sale Shares”) and get assurance that the Sale Shares are free from encumbrances? Some of …
Liability in M&A transactions
Joint and several liability; or several and not joint liability? Where there is more than one seller in an M&A transaction, the sale and purchase agreement should set out whether the obligations of the sellers under the SPA are (1) joint and several; or (2) several and not joint. From …
M&A: Factors to consider in representations and warranties
Not all M&A transactions are the same. Therefore, the representations and warranties (“R&W”) to be given by sellers in M&A transactions should not be the same for all SPAs. Some of the factors to consider in drafting or negotiating R&W given by sellers in M&A transactions should include the following: …
Structuring M&A transaction
Points to consider when structuring an M&A transaction (sale and purchase of shares) 1. Whether the shares, which are the subject matter of the sale and purchase (“Sale Shares”), a majority or minority stake? 2. Are the Sale Shares ordinary shares or preference shares or a combination of both? 3. …