M&A in Malaysia: What you need to know about private limited company
A private company limited by shares is a common legal entity encountered in M&A transactions, either as a seller, buyer or target. Some of the key requirements governing a private limited company include: 1. The Companies Act 2016 (“CA”) requires a private limited company to have at least one director, …
M&A: Quantitative limitations of liability
In M&A transactions, sellers may try to limit their liabilities by having quantitative limitations in the SPA. Quantitative limitations may take the following forms: 1. “De minimis” limit provides a minimum limit for a claim to be recoverable. The rationale is to exclude small claims where the cost incurred in recovering …
M&A: Dividend of a Malaysian company
When structuring an M&A transaction, declaration and distribution of dividend of the target company after completion may be one of the points that the parties want to include in a shareholders’ agreement. The following are some points to take note for declaration and distribution of dividend of a Malaysian company: …
M&A: Three types of material adverse change (MAC) clause
When drafting MAC clause in a sale and purchase agreement, consider which of the following may be more appropriate: 1. Measurable MAC This type of MAC clause provides that MAC is deemed to have happened when measurable financial metrics such as profit, EBITDA or turnover of a target company declines …
M&A: Material adverse change (MAC)
MAC clauses are contractual provisions which allow a buyer to walk away from a deal between signing and completion of the SPA upon the occurrence of material events which adversely affect the target company or business. MAC clauses are intended to provide for unforeseen circumstances which have an adverse effect …
What keeps you going?
An acquaintance asked me, “What makes you so passionate about M&A?” I must have displayed an incredulous look on my face because the person immediately changed the question to something along the line “Okay, maybe not passion but what makes you so interested in M&A that you often write about …
M&A: Why should a buyer conduct due diligence?
If you want to acquire a business or a company, should you conduct due diligence on the target? “Buyer beware” or “𝘤𝘢𝘷𝘦𝘢𝘵 𝘦𝘮𝘱𝘵𝘰𝘳” in Latin is a common law principle that a buyer buys at his own risk in the absence of an express warranty in the contract. Due to …
M&A from the purchaser’s perspective: Obligations and liabilities
In an M&A transaction, the purchaser should consider whether any of the following obligations and liabilities are relevant to its acquisition: 1. Where the target has obtained financing facilities which are secured by guarantee provided by the seller in favour of financial institutions, is the purchaser required to step in …
M&A: Retention of promoters or founders post acquisition
In an M&A transaction, it is common to retain promoters or founders who are instrumental to the success of a target company after the acquisition. The SPA typically provides for employment agreements or service contracts to be entered into between the target company and the promoters or founders on terms …
M&A: Asset sale and purchase
One of the advantages of asset sale and purchase compared to share sale and purchase is that a buyer gets to choose specifically the assets and liabilities which the buyer wants to acquire while leaving the rest with the selling company. Depending on the assets being acquired, the transfer of …