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BLP > 8. Acquisitions > Flashcards

8. Acquisitions Flashcards

(59 cards)

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1
Q

What forces S to make appropriate disclosures on warranties

A

Need to qualify warranties

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2
Q

What is a tax covenant

A

Indemnifying B for tax liability arising before completion

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3
Q

What will B also negotiate under confidentiality agreement

A

mutual confidentiality undertaking

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4
Q

Why do employees transfer automatically under business sale

A

TUPE

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5
Q

Who sends DDQ

A

Buyer

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6
Q

Why is SS simpler

A

Only transfer 1 asset

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7
Q

What is the usual procedure for exchange and completion

A

Simultaneous

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8
Q

When might exchange and completion not be simultaneous

A

If there are conditions precedent

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9
Q

Pros of business sale for S

A

Sell loss-making business

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10
Q

What is the only possible acquisition for Ps and STs

A

Business sale (as no shares)

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11
Q

Two kinds of acquisition

A

Share sale and business sale

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12
Q

What is the basis between warrantors if warranty breached

A

J&S

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13
Q

What is the cause of action if warranty breached

A

BoW + damages

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14
Q

Are HoTs usually legally binding?

A

No only moral force

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15
Q

When might HoA be agreed

A

Always before contracts, but maybe even before lawyers involved

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16
Q

What transfers automatically under business sale

A

Employees through TUPE

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17
Q

What does the DDQ allow B to do

A

Make fully informed coice

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18
Q

What might lawyer advise as a result of DDQ

A

Price reduction

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19
Q

When are warranties given by S to B (at what point in the transaction)

A

At completion

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20
Q

Two ways S can qualify warranties given

A

Specifically or generally

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21
Q

What determines the extent of the DDQ

A

Type of acquisition, instructions, budget, price and assets being bought

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22
Q

Cons of business sale for B

A

Disruptive; need 3rd party consents; more complex as need separate transfer of all assets

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23
Q

When are indemnities less likely (kind of acquisition)

A

Business sale

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24
Q

Where does S qualify warranties given

Study These Flashcards
A

In Disclosure Letter

25
Cons of share sale for buyer
More time/costs on due diligence due to liabilities + negotiating W/I; take company as it is
26
What can B try to agree with S in case of S's BoW
Escrow for part of purchase price to cover any BoW claim, to be released when period ends
27
When might S and B get tax advantages - kind of acquisition
Share sale
28
Why is assignment easier to move contracts in business sale
Bipartite instead of tripartite
29
What two clauses in HoT are usually expressly legally binding
Lock-out agreement and confidentiality clause
30
What is a business sale
Sale of part of company (a business) as a going concern
31
Why must Target Ds approve share sale (MA)
MA 26
32
What do responses to DDQ highlight for B
Areas of concern
33
Who prefers business sale
Buyer
34
What does a lock-out agreement ensure
No competition for sale, reducing wasted costs and time in due diligence
35
What document qualifies S's warranties
Disclosure Letter
36
Pros of share sale for B
No need for 3rd party consent, continuity and simpler
37
What document in share sale or business sale includes protection provisions for S
(Draft) Acquisition Agreement
38
Which assets of business transfer w/ business sale
Those chosen and listen
39
How long does confidentiality agreement usually last
Indefinitely
40
Why must M reg be updated in share sale
New Ms as shares sold
41
What PCR issue is necessary to keep in mind when acquiring another company
No illegal FA being given under 678/679
42
Cons of business sale for S
Unable to transfer undesirable parts; consideration only gets to Ms on winding up/dividend
43
Who prefers share sale
Seller
44
Pros of business sale for B
Cherry pick assets + liabilities
45
How does consideration get to Ms on share sale
Directly to Ms
46
When is the disclosure bundle prepared and by who
S's lawyers, when disclosure letter drafted
47
What kind of indemnity will not be applicable to business sale
Tax covenant
48
Why might S prefer business sale
Wants to keep operating other parts of company
49
MA 26 provides for what
Target Ds must approve share sale
50
Why no need for 3rd party consent on SS
No change of party to the contracts/owner of assets
51
Pros of share sale for S
Clean break + consideration straight to Ms of company
52
Two examples of headings in DDQ
Licences/Consents, Trading/Contracts
53
Two ways to value a company
Book value of assets or valued as a going concern
54
Procedure for Share sale
STF --\> B pays SD --\> Target Ds approve --\> Update M Reg
55
How does consideration get to Ms on business sale
Winding up/dividend
56
Why is there no determinative way to value a company
All are subjective
57
Two ways to move contracts in business sale
Assignment or novation
58
What S protection provisions might be included in Acquisition Agreement
Financial limit of liability and time limit for claim (shorter than 6 at common law)
59
Three ways S might try to reduce liability to B when giving indemnities and warranties
De minimis, de maximis caps and time limit in which claim to be brought

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