LPC Law Notes Private Acquisitions Notes
A collection of the best Mergers and Acquisitions* notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".
In short, these are what we believe to be the strongest set of Mergers and Acquisitions notes available in the UK this year. This collection is ...
The following is a more accessible plain text extract of the PDF sample above, taken from our Private Acquisitions Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
STANDARD OF DISCLOSURE FOR SPECIFIC DISCLOSURE
Contractual protections where delay between exchange and completion
Conditional contract = where the parties sign and exchange SPA, but there is then a delay between exchange and completion normally because S is waiting to obtain consents, clearances or approvals from third parties which are critical to the acquisition.
EXAMPLES:
landlord consent to assign a lease
third party waiver to a change of control clause
shareholder approvals
transfer of a market sector regulatory license from S to B
clearances, e.g. tax clearance from HMRC on roll-over relief being applicable on securities exchange or competition clearance from Competition Authorities
Completion will not take place until that condition has been fulfilled
if it has not been fulfilled within a certain period of time, B will normally have the right to rescind the contract and withdraw from the acquisition.
ALTERNATIVES…
Delay exchange
Problem? not contractually bound:
S problem - B may withdraw
B problem - S may find better offer
Uncertain - may lead to constant renegotiation
Delay - change in the market/business may lead B to want to walk away.
Time and cost
May be better bring negotiations to a close, put the agreement to bed, exchange contracts and then wait to complete
Exclusivity arrangement in separate contract
B won't be worried if S gets better offer
avoids need to exchange too early
Complete and take the risk, then adjust the price afterwards
Take the risk that the consent or approval will be obtained
Negotiate two separate prices for each eventuality:
If condition is fulfilled, price X
If condition is not fulfilled, price Y
Risk allocation – conditional contracts are risky for B:
B is agreeing to acquire the company but won't actually gain control until all SPA conditions are satisfied.
S will no longer own the company after completion, it may begin to neglect business between signing and completion.
S will want to retain as little risk as possible and will be reluctant to allow B to withdraw or renegotiate terms, as it will argue that any change in circumstances are risks assumed by B.
How risk is actually allocated between the parties will be a matter of negotiation and bargaining power.
Dealing with risk between exchange and completion? | ||
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(1) Repetition of warranties & right to terminate for breach of warranty | B will want S to repeat the warranties:
B will also want the corresponding right to terminate the agreement for breach of warranty. Why? This will protect B from breaches of the warranties between signing and completion. | Negotiation
Conclusion (matter for negotiation)
|
Restrictions on Management Actions | On exchange, B is contractually committed to proceed with the acquisition, but will not take control of the target until completion occurs. B has risk that S will neglect business before comp, knowing B must go ahead with the purchase.
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Buy the full version of these notes or essay plans and more in our Private Acquisitions Notes.
A collection of the best Mergers and Acquisitions* notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".
In short, these are what we believe to be the strongest set of Mergers and Acquisitions notes available in the UK this year. This collection is ...
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