Seller-friendly terms
Where there is a risk a buyer may sell on or IPO the target within a relatively short period after completion, the seller may want to share in any uplift in value as an anti-embarrassment mechanism. Under this sort of provision, the buyer will agree that it will pay additional consideration to the seller in the event it resells or IPOs the asset within a specified period.
Of course some processes are still competitive and we are seeing the emergence of some less common seller-friendly terms on those transactions:
A few high-profile transactions have made use of deposits which are non-refundable in certain circumstances. Deposits have long been a feature of property transactions and by analogy have commonly been used in real estate M&A transactions – as well as being common in oil and gas deals – but have been a relatively unusual feature of more general corporate M&A transactions. Most commonly, they are retained by the seller on termination of the SPA if the transaction has not closed due to some breach by the buyer, either because the buyer has not complied with its obligations at completion or has otherwise breached its obligations in relation to the satisfaction of the conditions. With the increased timelines between signing and closing (often as a result of the more interventionist approaches by various regulators), along with some high-profile transactions where buyers refused to complete in accordance with their contractual obligations during the Covid pandemic, it is easy to see why such arrangements are popular with sellers where they can get them.
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Deposits
Anti-embarrassment clauses
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We have seen a number of parties agreeing non-disparagement clauses, where one party agrees not to make any derogatory comments about the other post-closing.
Non-disparagement
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