Covenants | People's Republic of China | Global Private M&A Guide - Limited External Content

Is a noncompete common?

Frequency/market practice: Fairly common, but not from private equity sellers.

Is it common to use waterfall or blue pencil methods to interpret contractual provisions?

Frequency/market practice: Blue pencil methods are more commonly used.

Are nonsolicitation provisions (of employees) common?

Frequency/market practice: Fairly common (in conjunction with noncompete).

Are nonsolicitation provisions (of customers) common?

Frequency/market practice: Fairly common (in conjunction with noncompete).

Are seller restrictions usually imposed on the target business between signing the purchase agreement and closing?

Frequency/market practice: Fairly common (in conjunction with other pre-closing obligations).

Is there broad access to books, records and management between signing and closing?

Frequency/market practice: Fairly common. We generally get this for private deals.

Is it common to update warranty disclosure or notify of possible breach?

Frequency/market practice: Fairly common. Updating schedules is common but limited to things like lists of contracts. Notification of possible breach is common. In the case of a material breach, there is a right to terminate.

Global Private M&A Guide - Limited External Content

People's Republic of China

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