Acquisition agreements almost everywhere contain a mutual agreement, according to which the parties will make all reasonable efforts to conclude the transaction after signing. In the case of the steps necessary to complete the financing of the buyer`s acquisition, these provisions on reasonable efforts for buyers and sellers have become very extensive and detailed, especially since the end of the financial crisis in 2008. The lock is automatically unlocked while waiting 10 minutes. If you continue to exceed the SEC`s maximum allowable application rate during the expiration period, the duration of the expiration period will be extended. To ensure equitable access for all users, please reduce the rate of your requests and review SEC.gov after the 10-minute break expires. IN RECENT YEARS, NEGOTIATING AN ACQUISITION AGREEMENT AND THE ASSOCIATED ACQUISITION FINANCING OBLIGATION HAS BECOME INCREASINGLY COMPLICATED AND INVOLVES MULTIPLE PARTIES. Of course, the buyer is always closely involved in both negotiations, one of its main objectives being to make the conditionality of its financing commitments as consistent as possible with the conditionality of the purchase contract. Increasingly, however, the seller will review (and comment) on the buyer`s financing commitment documents, and conversely, lenders will review (and comment) on the purchase agreement. All of this usually happens quickly and in real time, especially in multi-bid transactions for a target company. In addition, lenders require that parties to the purchase agreement be expressly prohibited from amending the foregoing provisions in a manner detrimental to lenders without the prior written consent of the lenders. See Conditionality in Acquisition Financing Commitment Documents — Closing of Purchase Agreement Terms (Amendments). For an example of Xerox`s determination, see Examples of Provisions: XEROX Provisions in Acquisition Financing.
Several buyers, in some cases with the encouragement of their lenders, have attempted to withdraw from transactions negatively affected by the global financial crisis that began in 2007, which led sellers to sue banks for failing to provide the promised financing. As a result, lenders insist on including Xerox`s terms in the purchase agreement (so called because the first iteration of these provisions was required by the lenders in the purchase agreement for Xerox Corporation`s acquisition of Affiliated Computer Services, Inc. in 2010). Xerox`s regulations typically include, but are not limited to, sales agreements whereby: For any leveraged acquisition financing, lenders rely on the business to be acquired at least partially (in a strategic acquisition) and perhaps even entirely (in a private equity acquisition) to provide the source of funding for its repayment. Accordingly, the seller`s obligation to the buyer in the purchase contract to cooperate with the buyer to obtain its financing is crucial. In recent years, this alliance has become increasingly long and detailed. A typical interpretation of the agreement involves the seller`s obligation to cooperate appropriately with the buyer to obtain its financing, including reasonable efforts or efforts, and to induce its agents and advisers to do so: since the financial crisis, it has become rare for a purchase agreement to condition the buyer`s obligation to enter into debt financing. As a result, the buyer assumes a significant risk in the event of financing failure. However, it would be too simplistic to say that the buyer is the only party to assume such a risk. Buyers often manage to negotiate risk sharing with the seller, e.B. by limiting certain performance aids and/or damages for a financing error (through cancellation fees or otherwise). Since the seller may be seriously harmed by the failure to conclude a negotiated and publicly announced transaction, it is customary to ask the buyer to give certain assurances to the seller in the purchase contract regarding its financing obligation.
For more information about reverse separation fees and specific performance rights, see Negotiating reverse dissolution fees and provisions for limited specific performance rights and termination fees. Most importantly, this financial cooperation usually includes the obligation for the seller to provide all the necessary information to start the marketing period specified in the purchase contract and the letter of commitment. .