IRELAND Law and Practice Contributed by: Enda Garvey, Brian McCloskey and Robert Maloney Derham, Matheson LLP
sidisation conditions under the FDI or Foreign Sub - sidies Regulation (FSR) regimes. This position may evolve in relation to the new FSR and FDI regimes over time – particularly in relation to the FDI regime, following the recent commencement of the Screening of Third Country Transactions Act in September 2024. An example of an FDI condition that may be included in future clearances could be an information barrier between the target and the acquirer post-completion to protect sensitive information. Equally, an FSR con - dition that may be included in future clearances could be to repay any foreign subsidy that distorts the inter - nal market and gives the buyer the ability to make the acquisition that they otherwise would not have. 6.6 Break Fees The inclusion of break fees or reverse break fees in private equity transactions remains rare. This is down to the reticence of private equity buyers to agree to pay costs in the event that a transaction does not reach completion. Break fees are common, however, in public company takeovers and are permissible under the applicable Irish takeover rules (see 7.1 Public-to-Private ), pro - vided that the Irish Takeover Panel has expressly con - sented to them. Such consent is ordinarily only given where the Irish Takeover Panel is satisfied that: • the break fee relates to specific quantifiable third- party costs; • it is capped at 1% of the value of the offer at the time the firm announces its intention to make the offer payable; and • written confirmation has been received from the board and financial adviser of the target, stating that they believe that the break fee is in the best interests of their shareholders. 6.7 Termination Rights in Acquisition Documentation As mentioned in 6.4 Conditionality in Acquisition Documentation , outside of regulatory requirements, parties tend to avoid conditionality. Where a deal is subject to regulatory approval and it is not received, the other party may terminate.
Parties will generally put in place a longstop date. These periods have been extended in recent times, owing to the increase in the number of third parties involved in deals, as well as the increased complexity of deals. When agreeing upon a longstop date, it is crucial that buyers and sellers consider whether closing condi - tions are feasible within the given timeframe or may take longer than otherwise anticipated. It is also use - ful to consider the circumstances in which a longstop date may be extended or adapted. The longstop date will vary depending upon the nature of the transaction but is typically up to 12 months. 6.8 Allocation of Risk The allocation of risk between a buyer and seller will depend on the nature of the transaction and the underlying business or asset(s). However, current mar - ket conditions favour sellers, so this can lead to the buy side bearing more risk. W&I insurance has become increasingly prevalent in Irish deals during the past few years. Such policies serve to reduce the seller’s liability and, in the case of some assets, liability can be limited to as little as one euro. In line with market practice, private equity-backed sellers will typically bear very little risk outside of title and capacity warranties. In the authors’ experience, both trade sellers and trade buyers in the Irish market will often bear more risk on transactions. 6.9 Warranty and Indemnity Protection Typically, a buyer will endeavour to include far-reach - ing and broadly drafted warranties, whereas a seller will seek to limit the scope of the warranty language so as to reduce the likelihood – and financial conse - quences – of a warranty claim. Due diligence reports are deemed to be disclosed against the warranties given for the purposes of the W&I policy, effectively putting the purchaser on notice of all the matters con - tained therein and excluding liability for such matters. In recent years, it has become increasingly common for the VDR to be disclosed.
264 CHAMBERS.COM
Powered by FlippingBook