• LoI, MoU & term sheet

During the first exploratory discussions on a merger or takeover, the parties often consciously or subconsciously already agree on crucial matters or forget to discuss them. These matters could turn out to play a major role later on in the process. This is why it is important to obtain expert legal advice before signing a letter of intent (LoI), heads of terms, memorandum of understanding (MoU) or term sheet, even if they appear to be free of obligations. These documents form part of the pre-contractual phase you find yourself in, and they come in all shapes and sizes.

Valuation, due diligence and corporate governance

For buyers, it is important to establish at an early stage – and where appropriate – that the seller is not negotiating with other parties (exclusivity), and it is also essential that the seller agrees to maintain proper confidentiality with the buyer. The parties may also make agreements on the valuation, the scope and the impact of the due diligence investigation, and on corporate governance in your joint company after the transaction is completed. This is especially important in the case of joint ventures.

Termination of negotiations

This phase invariably includes the question of whether you are allowed to terminate negotiations with impunity and if so, to what extent you may do this. The pre-contractual documents play a major role in this as well. As the buyer, you would like to be at liberty to terminate negotiations e.g. if the due diligence investigation reveals any negative aspects. And as the seller, you would prefer to see a little more commitment, particularly if you have already shared relevant information with a potential buyer and maybe discouraged other parties interested in buying.

Ploum can provide you with legal assistance

The specialists of Ploum will advise you in the pre-contractual phase on the LoI, MoU or term sheet.