A(POST) COVID -19 APPROACH TO SALE AND PURCHASE AGREEMENTS- BY JOCHEN ELLROTT

A lot has been written about the macro-economic environment in which we expect to find ourselves as we emerge from the COVID-19 pandemic. For deal makers it is also worth contemplating exactly what individual transactions might look like as we navigate the ‘new normal’ – an environment that most expect to be at risk of follow-on shocks and that will invariably remain impacted by systemic weaknesses for a significant period to come.

In this environment, what characteristics can parties expect to become more prevalent in deal documentation? What types of provisions will buyers and sellers seek with increasing frequency? How will parties seek to mitigate risks that, if not exactly novel, have certainly been brought into greater focus and made more acute since the start of the year?

Global Transactions partner Jochen Ellrott explores these questions and more, and provides insights into how the SPA of tomorrow may look:
Buyers of businesses may have been excited when they signed a deal a few months ago, but the world has changed in unprecedented ways since then and consummating the deal in a post-COVID-19 world may have lost most of its appeal. A couple of examples: it appears that LVMH is keen on wriggling out of, or better yet renegotiating, its deal to acquire Tiffany for $16.5bn. Private equity firm Sycamore Partners made L Brands agree to cancel Sycamore’s acquisition of L Brands’ trophy, yet troubled, brand “Victoria’s Secret”, after suing for breach of pre-closing covenants on the basis of store closures, inventory cut-backs, non-payment of rent, and employee furloughs. There is also a very interesting ongoing case in the English High Court involving WEX, eNett and Optal, which relates to the invocation of a material adverse effect (MAE) clause. There are other, known and unknown, cases of “deal remorse” out there that have led to pre-closing disputes, and their number is certainly going to increase.

Meanwhile, potential buyers are lining up to forge ahead with existing expansion plans that were delayed due to the pandemic or take advantage of the opportunities that the post-COVID-19 economic landscape may present. Both sets of parties will need to pay very careful attention to the interpretation and negotiation of sale and purchase agreements.

Please use this document for study, research and business purposes only. We object to commercial and other illegal purposes in the use of this document.

LINK DOWNLOAD: A(POST) COVID -19 APPROACH TO SALE AND PURCHASE AGREEMENTS- BY JOCHEN ELLROTT

CONTACT US

Lawyers in Da Nang:

99 Nguyen Huu Tho, Quan Hai Chau, Da Nang city

Lawyers in Ha Noi:

45C Tran Quoc Toan, Tran Hung Dao Ward, Hoan Kiem District, Ha Noi

Lawyers in Hue:

336 Phan Chu Trinh, Hue City, Thua Thien Hue

Lawyers in Phu Quoc:

65 Hung Vuong, Duong Dong town, Phu Quoc island district

Lawyers in Quang Ngai:

359 Nguyen Du, Quang Ngai City, Quang Ngai Province.

Website: www.fdvn.vn  www.fdvnlawfirm.vn và www.diendanngheluat.vn

Email: fdvnlawfirm@gmail.com luatsulecao@gmail.com

Phone: 0935 643 666 - 0906 499 446

Fanpage: https://www.facebook.com/fdvnlawfirmvietnam