LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
NSSF contributions and undocumented employment arrangements, which frequently represent the most significant sources of post-closing liability. Where the company operates in a regulated sector, verification of licences and regulatory approvals is also necessary. Financial information is reviewed with accountants to assess debt exposure and the com - pany’s financial position. As a result, Lebanese due diligence is less confirma - tory and more investigative in nature, and its findings frequently influence valuation and payment structure rather than the decision to proceed with the transac - tion itself. 5.4 Standstills or Exclusivity In Lebanese practice, buyers are more likely to request exclusivity than sellers are to demand a standstill. Exclusivity typically arises once negotiations become serious, often at the stage of the confidentiality agree - ment and more commonly in the letter of intent, when the buyer is preparing to conduct and finance due diligence. At that point, the buyer begins incurring significant legal, financial and advisory costs, and therefore seeks a protected negotiation period during which the seller undertakes not to solicit or negotiate with competing bidders. The purpose is to avoid a situation in which the seller relies on the buyer’s due diligence to test valuation and then approaches other purchasers to obtain a higher offer. The protection may be reinforced by a break-up fee compensating the buyer if the seller withdraws from the transaction or accepts a competing offer after the buyer has invested substantial resources. However, under Article 266 of the Code of Obligations and Con - tracts, a Lebanese judge retains the power to reduce a break-up fee if it is deemed “excessive” or “dispropor - tionate” to the actual damages suffered, regardless of the amount agreed in the contract. Sellers, how - ever, often resist broad exclusivity because it limits their ability to seek a better price and weakens their bargaining position; they may therefore shorten its duration or grant it only after the buyer demonstrates serious intent – eg, by presenting an indicative price or evidence of financing.
Standstill undertakings are less common and tend to arise in specific situations, particularly where the tar - get fears that a potential buyer could acquire shares outside the negotiated transaction, eg, in companies with relatively dispersed ownership. 5.5 Definitive Agreements Lebanese law does not require a tender offer to be pre - ceded by a definitive acquisition agreement. A public tender offer is formally a unilateral offer addressed to all shareholders once approved by the CMA. In practice, however, tender offers are rarely launched without prior arrangements. Where control is held by one or more significant shareholders, the bidder will typically negotiate the principal terms of the acquisi - tion with them in advance, often through a share pur - chase agreement or similar arrangement. The public offer is then structured to reflect the price and con - ditions already agreed with those shareholders and extended to the remaining shareholders on equivalent terms. Accordingly, while the tender offer itself is not doc - umented as a bilateral definitive agreement with all shareholders, it commonly follows a negotiated transaction with key shareholders and functions as the mechanism for extending that agreed deal to the market. 6. Structuring 6.1 Length of Process for Acquisition/Sale Acquiring or selling a business in Lebanon gener - ally takes approximately four to six months, although the timing varies depending on the complexity of the transaction and the level of regulatory involvement. The process is largely driven by due diligence and negotiation of transaction documents during the initial phase, followed by completion steps, such as corpo - rate approvals, regulatory clearances where required, and registration formalities. In practice, filings before the Commercial Register and, in regulated sectors, approvals from competent authorities, rather than the negotiation itself, often represent the main tim - ing constraint. The legal documentation can typically
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