Covenants | United Kingdom | Global Private M&A Guide - Limited External Content

Is a noncompete common?

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

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

Frequency/market practice: Rarely. Waterfall provisions are uncommon, except in respect of noncompete obligations.

Are nonsolicitation provisions (of employees) common?

Frequency/market practice: Very common, usually in conjunction with non-compete. Private equity sellers will usually agree to give a nonsolicit of employees.

Are nonsolicitation provisions (of customers) common?

Frequency/market practice: Very common, usually in conjunction with a non-compete.

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

Frequency/market practice: Very common. The purchase agreement will typically contain, in a schedule, a lengthy list of restrictions on the ability of the seller to cause the target to act in a way that may adversely affect the value of the target.

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

Frequency/market practice: Very common. Generally, there is broad access for private deals. There are competition law issues around the risk of 'gun-jumping' (resulting from the exchange of commercial information pre-completion).

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

Frequency/market practice: Fairly common. Updating schedules (or the disclosure letter) is common but typically limited to matters that have arisen since the date of signing of the purchase agreement. The ability of the seller to disclose a possible breach is common. In the case of a material breach, the right to terminate is common.

Global Private M&A Guide - Limited External Content

United Kingdom

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