When planning for a sale, founders should sort out their employment or service contracts early.
A buyer acquiring a company may want key personnel to stay on after completion to continue providing their expertise to the company. Sometimes that includes the founder. In many deals, the sale and purchase agreement (SPA) requires the seller to deliver a signed employment or service contract with these key …
The Deal That Didn’t Happen: When the Founder Walked Away
My first encounter with a failed M&A deal happened when the founder refused to provide common representations and warranties. He also declined to fix compliance issues found during due diligence. By the time the founder pulled out, both founder (seller) and buyer had already spent significant time in weekly due …
Compliance and Legal Due Diligence: An Exercise of Frustration?
Lawyer: Please provide register of members, register of directors, all returns of allotment, all stamped transfer forms… Representative of Target Company: Please refer to company search from the Companies Commission of Malaysia. Lawyer: CCM search is not sufficient. Please provide register of members, register of directors, all returns of allotment, …
Minority Shareholders Have Rights Too
Minority shareholders holding less than 50% of the voting shares in a company have certain rights provided under the Companies Act 2016 including the following rights: Shareholding of at least 5% Shareholder(s) of a private company representing at least 5% of the total voting rights may block reappointment of the …
M&A: When Should the Seller Disclose to Qualify Representations & Warranties
Another lawyer asked me when a seller should provide disclosure to qualify the representations and warranties given by the seller in a sale and purchase agreement (SPA) for an M&A transaction. I thought I’d share my response here. The seller typically provides a disclosure letter to qualify the representations and …
Deconstructing M&A Agreement
When I review a draft sale and purchase agreement for an M&A transaction, here’s how I would break down the key items that need to be addressed in the agreement: 1. Before fulfilment of conditions precedent What are the conditions precedent? Who is responsible for fulfilling the conditions precedent? When …
M&A Specialist and Generalist
I didn’t fully appreciate how specialised and broad M&A practice is until I found myself thinking about how various legal issues discussed in the articles I read apply to M&A transactions. While reading an article on whether consideration is required for the variation of contracts, I was reminded of a …
Exclusivity when negotiating an M&A deal
If you are a buyer negotiating to acquire business or shares of a company, you would want to ensure that you do not incur costs during the negotiation only for the seller to end the negotiation and sell to another party. A buyer would want to ensure that the seller …
Material Adverse Effect (“MAE”) Clause in M&A Transactions
I came across the following definition of “MAE” from the American Bar Association’s Canadian Private Target M&A Deal Point Study: “MAE” means any result, occurrence, fact, change, event, or effect that has, or could reasonably be expected to have, a materially adverse effect on the business, assets, liabilities, capitalization, condition …
Don’t Rush the Disclosure Letter in M&A Transactions
In M&A transactions, a disclosure letter sets out the exceptions to seller’s representations and warranties in a sale and purchase agreement for an M&A transaction (“SPA”). Instead of negotiating heavily on sellers’ representations and warranties in SPAs, it is common to provide in SPAs that sellers’ representations and warranties are …