Tactical dealmaking – it’s all in the due diligence
Publication: Acquisitions Daily
Entering into negotiations for the purchase (or sale) of a business is not taken lightly. It is generally assumed that each side has its own motives for entering into discussions. The parties will usually meet and the purchaser will set out his or her proposals.
A range of transactions including: mergers and acquisitions; joint ventures; restructuring and private equity investments will see the parties entering into ‘heads of terms’ (sometimes known as letters of intent or heads of agreement) to outline the main terms of the deal agreed.
It should not be assumed that a ‘heads of terms’ will be used to negotiate the terms of the deal. This document may be evidence of serious commitment, but it is not a legally binding document compelling the parties to enter into the deal on the terms contained therein. However, it will help to dispel misunderstandings and can provide an almost step-by-step guide to the transaction process. It will summarise the main points to be considered by all parties and their advisers by outlining the proposed timetable of the process and the obligations of each party in matters such as exclusivity, confidentiality and price.
Once the preliminary terms have been agreed pursuant to…
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