IRELAND Law and Practice Contributed by: Enda Garvey, Brian McCloskey and Robert Maloney Derham, Matheson LLP
Conditions Precedent In general, parties seek to avoid conditionality in order to make the terms of a deal more certain, and there has been increased focus from sellers on condition - ality in recent years. Where conditions precedent are provided for in share sale agreements, they are typi - cally limited to the following: • obtaining change-of-control consents from key customers and/or suppliers, so as to ensure that key strategic contracts are preserved for the buyer; • a requirement that specified permits, licences or consents are obtained to enable the buyer to com - plete the purchase and/or carry on the business; • where the company operates in a regulated sector, obtaining all necessary regulatory consents and waivers; • shareholder consent, which may be required in certain circumstances – in particular, where one of the parties is a listed company; and • other transaction-specific conditions. 6.5 “Hell or High Water” Undertakings In Ireland, competition clearances are a condition to completion, with completion pending approval from a regulator, eg, the CCPC. This is also the approach taken to the recently commenced FDI regime. The risks of merger control clearance are often passed on to the purchaser by the use of a “hell or high water” (HOHW) clause, which may include an obligation on the purchaser to: • make divestments; • agree to behavioural commitments; or • litigate in the event the transaction is blocked by the CCPC. In the authors’ experience, private equity-backed buy - ers generally do not accept HOHW undertakings in Irish deals which involve a regulatory condition. How - ever, it should be noted that under certain conditions, private equity-backed buyers may be more open to accepting such undertakings, eg, in the case of a ‘no overlaps’ concentration (ie, where there is generally no prospect of a significant competition issue). At present, it is more common for HOHW undertakings to be utilised in relation to merger-control/antitrust conditions, rather than for foreign investment/sub -
and infrastructure sectors, it would be unusual to see an equity ticker where the target is loss-making and pre-revenue – given the target is unlikely to hold any excess cash profits made between the locked-box date and completion. 6.3 Dispute Resolution for Consideration Structures It is typical, irrespective of the consideration mech - anism, to have a dedicated expert or other dispute resolution mechanism in place for consideration struc - tures in private equity transactions. The most common provision is for disputes to be referred to a dedicated expert, with the appropriate expertise and level of experience, for determination. This is often by reference to the Big Four accounting firms. More generally, there has also been an increase in the inclusion of arbitration clauses. These usually involve the parties agreeing that any disputes arising between them be referred to arbitration and that neither party can pursue litigation until the arbitration process has been exhausted. 6.4 Conditionality in Acquisition Documentation Regulatory Approval Private equity transactions in Ireland are subject to regulatory approval by the Competition and Consum - er Protection Commission (CCPC). The substantive test for clearance applied by the CCPC is whether the merger would substantially lessen competition in the relevant markets for goods or services in Ireland. For media mergers, there is a further step whereby the Minister for Culture, Communications and Sport then applies a media plurality test to determine whether the merger would be contrary to the public interest in protecting the plurality of the media in Ireland. See 2.1 Impact of Legal Developments on Funds and Transactions for a discussion of Ireland’s imple - mentation of the EU FDI Regulation, which provides for a new mandatory notification to and “screening procedure” by the Minister for Enterprise, Tourism and Employment for certain transactions.
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