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 must the conditions precedent be fulfilled?
• When will the condition period expire?
• What are the rights and liabilities of the parties if the conditions precedent are not fulfilled?

2. After fulfilment of conditions precedent up to completion

• What are the restrictions on the target company and seller during the period after the fulfilment of the conditions precedent up to completion?

From the seller’s perspective, the restrictions should not be so stringent that they affect the business and operations of the target company.

From the buyer’s perspective, the buyer seeks assurance that the target company at completion of the acquisition is substantially the same company (operationally and financially) that the buyer intends to buy when signing the agreement.

• What are the events that may give rise to termination during this period?
• What are the rights and liabilities of the parties if the agreement is not completed after fulfilment of conditions precedent?

3. Completion

• When will completion take place?
• What steps need to be taken for the completion of the sale and purchase?

4. Post completion

• What are the parties’ obligations post-completion?

Think about notifications to banks regarding the change of guarantor for facilities granted to the target company, earn-outs, and rectifications of issues discovered during due diligence that are not serious enough to disrupt the transaction but still need to be addressed

• When must the post-completion obligations be fulfilled?

It helps me think systematically, particularly when a draft is not well-structured, and I have to figure out what the counterparty is asking in the draft.

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This post was first posted on LinkedIn on 8 March 2025.