M&A: Retention of Key Personnel

Retention of key personnel in M&A transactionss
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A buyer who acquires a company may want to ensure that the key personnel of the company will continue to provide their expertise to the company post-acquisition. Typically, the sale and purchase agreement (“SPA”) would provide for the vendor to deliver the duly executed employment or service contract between the company and key personnel for an agreed duration, to the buyer on completion of the SPA.

If the terms and conditions (“T&C”) of the employment or service contract have not been agreed before the SPA is executed, the parties may face issue in coming to an agreement on such T&C when it is time to complete the SPA. This may derail the completion or result in a party agreeing to T&C which are less satisfactory due to time pressure to complete the SPA. To avoid this, the SPA may provide for the T&C of the employment or service contract to be included as a schedule to the SPA and the employment or service contract to be executed and delivered on completion, to be substantially on the same T&C as set out in the SPA.

If the retention of the key personnel is crucial, the parties should not put off the negotiation of the employment or service contract until the SPA is executed.




This post was first posted on Linkedin on 7 December 2020.

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