How to Draft Clear and Effective Conditions Precedent in M&A Transactions
The fulfilment of conditions precedent in an M&A transaction signifies that a sale and purchase agreement has become unconditional and the parties are obliged to complete the transaction. Failure by any party to complete the transaction after conditions precedent are fulfilled usually results in that party being liable to compensate …
M&A: Categorising Seller’s Representations and Warranties
M&A: Categorising Seller’s Representations and Warranties (particularly if you don’t have Representation & Warranty Insurance) The representations and warranties (R&W) given by a seller in an M&A sale and purchase agreement (“Seller’s Warranties”), if breached, may affect the M&A transaction to varying degrees. It is worthwhile categorising the Seller’s Warranties …
What should purchasers consider in M&A transactions?
Other than the purchase price, what should purchasers consider in M&A transactions? In M&A deals, purchasers should consider aspects beyond the purchase price that could impact their acquisitions. The following are three factors to consider: 1. Guarantee for the target’s borrowing If the target has financing facilities guaranteed by the …
Frequently Encountered Issues in Acquisition of Entrepreneurs’ Businesses
There are some issues that I frequently encounter in start-ups/ entrepreneurs’ businesses when conducting legal due diligence for buyers seeking to acquire such businesses. Here are some of the issues: 1. No Separation of Legal Entity A founder may own several companies at the same time. It’s common for a …
M&A: Is consent or notification required?
In an M&A transaction, it should be determined early on whether consent from or notification to the following parties is required for the change of shareholder or director of the target company: (a) regulatory body (pursuant to a condition imposed on a licence or regulatory requirements) (b) counterparty of a …
What to Look Out for When Acquiring Companies: Material Contracts
Potential buyers/ investors who want to acquire companies should consider conducting legal due diligence on the target companies before their investments. One key aspect of legal due diligence are material contracts of the companies. Legal due diligence on material contracts allows the potential buyers/investors to assess the business, liabilities and …
Is there any good reason not to conduct legal due diligence in M&A transactions?
I have read articles and written about why legal due diligence is important for M&A transactions and buyers should not merely rely on sellers’ warranties. I have yet to come across any articles suggesting that there may be valid reasons to skip legal due diligence in M&A transactions. Whenever potential …
Regulatory requirements for M&A in Malaysia
I find one of the most challenging aspects of an M&A transaction in Malaysia is the regulatory regime in which the target company operates. If the target company requires certain licences for its operations or operates within a regulated industry, the M&A process must take into account the relevant regulatory …
Due Diligence: What Are Salient Terms?
In corporate transactions, junior lawyers are often tasked with reviewing contracts and summarising salient terms for inclusion in legal due diligence reports. For those new to legal due diligence, a frequently asked question is, “What do you mean by salient terms?”. Generally, salient terms include information that investors need to …
Deemed knowledge in M&A transactions: How sellers and buyers can protect their interest
In negotiations for M&A transactions, one of the most contentious points is whether the documents disclosed by sellers for due diligence conducted by buyers should be deemed incorporated into disclosure letters. A disclosure letter sets out known issues which amount to inaccuracies or exceptions to the representations and warranties (R&W) …