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 …
M&A: More than just business
The days leading up to the signing of an M&A SPA are usually intense, with negotiations and amendments at the eleventh hour. Working around the clock is almost a given. Even when a vendor and purchaser think they have reached an understanding, it may not be the same understanding. Our …
M&A: Retention of Key Personnel
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 …
Seller’s Representations and Warranties in M&A: Three Things to Avoid
1. Representations and warranties about the future. The seller should avoid providing representations and warranties in respect of future events due to uncertainty about the future. Further, after the seller disposes of the seller’s shares, the seller may no longer be in control of the target company and hence, not …
Key milestones for mergers and acquisitions (“M&A”)
1. Due diligence A seller may allow a buyer and its advisers to conduct due diligence on the target company or target asset up to a cut-off date. This is the process of finding out whether there is any major issue which may affect the M&A transaction or the buyer’s …
Buyer beware: How to address issues on assets or company
Let the buyer beware Under the law, there is a principle known as “let the buyer beware” or “caveat emptor” which generally means that buyer purchases at the buyer’s own risk. The principle places the onus on the buyer to conduct due diligence before making a purchase. A prudent buyer typically carries out due diligence …
What to do with guarantee in sale and purchase of shares?
In a share sale and purchase agreement, if there is any guarantee given for a loan granted to the target company or the target company has given any guarantee for a loan granted to other company in the seller’s group, the buyer and seller should address what to be done …
Stamp duty exemption for merger or acquisition by SMEs
The Stamp Duty (Exemption) (No. 3) Order 2021 (“Exemption Order”) exempts instruments in relation to an approved merger or acquisition executed by small and medium enterprises from stamp duty. The Exemption Order was gazetted on 25 February 2021 and is deemed to have come into operation on 1 July 2020. …
Seller’s representations and warranties in M&A: Three things to avoid
In an agreement for sale and purchase of business or shares of a company, a seller typically represents and warrants that the business or the company is of certain calibre. A breach of the seller’s representations and warranties amounts to a breach of contract which may entitle the purchaser to …
M&A buyer’s perspective: Should director and shareholder of seller be a party to the SPA?
In a sale and purchase of shares or business, where the seller is a corporation, it is worth considering whether to include the person who has control over the corporate seller (“Person”) as a party to the sale and purchase agreement (“SPA”). The Person would typically be a director and/or …