Why use a term sheet for M&A transaction?
A party wants to acquire the assets owned by another party. The other party is willing to sell its assets. It should be a straight forward offer and acceptance, right? Unfortunately, not in this case. The potential seller wants to sell the shares of the company which owns the assets …
Provision of Financial Assistance by PLC
*Scenario* A public company listed on Bursa Malaysia (seller) disposes some of its shares in its wholly owned subsidiary which is not listed (target company). After completion of the disposal, the target company will become an associated company of the seller. There is an existing guarantee given by the seller as security …
Basis for pricing in M&A transactions
As a buyer, there may be a price or earnings multiple or other basis which you use to value the business or company that you buy. In such instance, you may want to consider including a clause in the sale and purchase agreement to state that the parties acknowledge that …
How does a buyer ensure the shares that the buyer acquires in a company are free from liabilities which the buyer doesn’t intend to assume?
The first step is conduct due diligence to find out red flags about the company. The scope of due diligence depends on the buyer’s risk appetite and the size of the deal. Due diligence may include legal, financial, operational and tax matters. Once the issues arising from the due diligence …
Seller’s verbal representations in M&A transaction
As a buyer, do you rely on verbal representations made by the seller before you engage your lawyer? In a sale and purchase of shares or assets, the seller and buyer may have been negotiating the deal for some time before they engage their respective lawyers to draft the sale …
Frequently negotiated clauses in SPA
In an asset or share sale and purchase agreement, what clauses are typically negotiated at length? From my experience, the following areas are usually heavily negotiated: – Limitation of the parties’ (usually the sellers’) liabilities – Exclusion of the parties’ liabilities – What gives rise to the right to terminate …
Provision of guarantee to associated company etc after disposal
When a PLC disposes of part of its shares in a subsidiary (target company) which results in the target company becoming an associated company or joint arrangement of the PLC, the provision on financial assistance under the Listing Requirements should be taken into consideration. If the PLC or its other …
Key milestones for M&A transaction
• Due diligence A seller may allow a buyer and its advisers to conduct due diligence on the target company/asset up to a cut-off date. This is usually a hectic time for the lawyers conducting the legal due diligence. • Execution of agreement The days leading up to the SPA …
Common issues in M&A transactions
Common issues in M&A transactions: • Guarantor The seller and buyer may want the other party’s obligations under the sale and purchase agreement (SPA) to be guaranteed by another party (usually the holding company or shareholder) if the seller and buyer do not have strong financial means. • Limitation of …
M&A: Change of name
A company which is the subject matter of a sale and purchase transaction may have certain words as part of its name, which are same as the names of other companies incorporated by the same shareholder. Where shares of such company are sold to a buyer who is unrelated to …