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 …
M&A: What representations and warranties to get from seller?
In an agreement for sale and purchase of business or shares of a company (“SPA”), it is typical for the seller to represent and warrant to the purchaser that the target business or target company is of certain calibre. Typically, there would be fundamental representations and warranties in the SPA …
Related party transaction within an M&A deal
When a buyer enters into an agreement with a seller to acquire shares of a company from the seller (“Transaction”), the buyer and the seller may negotiate for some other deals involving the target company to be included in the sale and purchase agreement in respect of the Transaction. For …
M&A: Why shouldn’t the agreement for retention of key personnel be deferred to post completion?
The Pitfalls of Deferring the Agreement It all started well in the first case. Both the seller and the purchaser of the subject company in the first case agreed that the sale and purchase of the company would be on friendly terms and that the transaction should be completed as …
Disposal of business: What to take note
Business owners or sellers who are disposing their business, whether by way of disposal of business assets or disposal of shares of companies which own the business assets, should take note of the issues set out below. The disposal of business assets and/or disposal of shares of companies which own …