CZECH REPUBLIC Law and Practice Contributed by: Petr Janů, Vladislav Klimeš and Leoš Vavřík, BADOKH
basic information on the deal either very soon after the deal is settled or once the information on the pending deal is publicly accessible (eg, if the deal is subject to approval by the Czech Antitrust Office, which makes all announce - ments public). 5.3 Scope of Due Diligence The scope of due diligence performed in a negotiated transaction typically covers various aspects of the target company’s operations, finances, legal status and other relevant areas. The specific areas covered may include finan - cial, legal, tax, operational, technical or envi - ronmental due diligence. The purpose of this due diligence process is to assess the target’s assets, liabilities, potential risks and overall suit - ability for the proposed transaction. In a public takeover, persons who have obtained confidential information about the bid must keep it confidential (in order to prevent market distor - tions) until the bid is publicly announced (see 5.1 Requirement to Disclose a Deal ). As a result thereof, the due diligence process in the case of a private acquisition is more open than in the case of the acquisition of a public (listed) com - pany. 5.4 Standstills or Exclusivity If the target company is a private company, it is standard market practice for the buyer and seller to enter into an exclusivity (and confidentiality) agreement, at least for a limited period of time. This motivates the buyer to effectively invest its time and financial/human resources in a particu - lar transaction and, at the same time, the seller is aware of the expected timing of the transaction. Standstill agreements are not common in private M&A transactions, as the additional increase of shares in the target company by the sharehold - er is usually regulated by protective measures
set out in a shareholders’ agreement or similar agreement. If the target company is a public company, the bidder and the target company are prohibited from entering into exclusivity agreements or sim - ilar agreements. This is to protect the value of the target company and to prevent unequal dissemi - nation of information about the target company. The use of standstill agreements (ie, restrictions on the acquisition of additional shares in the target company) in (hostile) takeover bids is not common. However, this may be due to the fact that historically there have been only a limited number of cases of attempted hostile takeovers. There is not enough experience and knowledge of such procedures. In addition to the above, standstill agreements by definition cannot be used in the case of a mandatory takeover offer or supplementary takeover offer, as in such cases, the bidder is obliged to acquire additional shares in the target company. 5.5 Definitive Agreements It is common for tender offers that all material terms and conditions of a takeover bid are set out in an offer document. The legal requirements for such documents vary – eg, depending on whether the bid is mandatory, voluntary or sup - plementary. See 7.1 Making a Bid Public . 6. Structuring 6.1 Length of Process for Acquisition/ Sale The duration of M&A transactions varies a lot, depending on many factors such as the intensity of negotiations, the level of regulation or the level of involvement of third parties and/or impact of
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