USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang, Gregory Gewirtz and Vinita Sithapathy, Linklaters
exists include adoption of board resolutions, execu - tion of a letter of intent, and appointment of financial and other advisers. Stock exchange disclosure and reporting rules and regulations governing disclosure of material non- public information also need to be considered in the M&A context. 5.2 Market Practice on Timing In the USA, the buyer will generally carry out legal, financial, commercial and tax due diligence. The scope of due diligence review varies based on: • the client’s needs and the nature of the target com - pany’s business; • whether the target company is private or public; • the proposed transaction structure; and • the level of access to the target company. Information collected during the due diligence pro - cess can have an impact on: • purchase price (ie, valuation of the target com - pany); • transaction/tax structuring; • drafting of the purchase agreement; • certain steps that need to be taken prior to closing (such as consents required from any change-of- control provisions); or • in some cases, whether to proceed with the pro - posed transaction at all. See 7.1 Making a Bid Public . 5.3 Scope of Due Diligence US market practice does not provide for the target company preparing vendor due diligence reports for potential buyers. If a target shareholder is to receive shares of buyer stock as consideration, reverse due diligence of the
unsolicited actions with respect to a seller (eg, acquir - ing securities, commencing a tender offer or otherwise trying to obtain control of the target company or its board or management without approval). Potential buyers also often request that the target company enter into an exclusivity agreement provid - ing for a period of exclusive negotiations following the end of an initial bidding phase. Negotiation dynamics will influence whether a seller would agree to such a request. 5.5 Definitive Agreements As noted previously, friendly transactions are almost always effected pursuant to a board-approved merger agreement setting out the terms and conditions of the transaction between the acquirer and the target com - pany, including whether the transaction is structured as a tender offer followed by a second-step merger. 6. Structuring 6.1 Length of Process for Acquisition/Sale The following factors, among others, determine how long the process of acquiring or selling a business in the United States takes: • the type of asset that is the subject of the transac - tion; • the extent of due diligence needed; • whether there is an auction process; • timing of regulatory approvals; and • whether the transaction is challenged in court. The entire process (until closing) generally takes at minimum three to four months from when discussions are initiated. Auctions To maximise the sale price, sellers often run an auction process where they give potential buyers a confiden - tial information memorandum, and the potential buy - ers submit their initial indications of interest several weeks (approximately three to four) thereafter. Poten - tial buyers then normally submit their markup of the auction draft as part of their final bid, typically four to eight weeks after the initial indications of interest.
buyer would also be expected. 5.4 Standstills or Exclusivity
Standstill provisions are commonly included in confi - dentiality agreements if the target company is a pub - lic company, prohibiting a buyer from taking certain
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