Introduction to M&A Pre-Acquisition Agreements: Confidentiality Agreements, Letters of Intent, Term Sheets, and More

This CLE webinar will provide an introduction and overview of the preliminary agreements used at the start of the M&A process including letters of intent (LOIs) and/or term sheets and confidentiality agreements. The panel will discuss what each of these agreements are, why and when they are used, advantages and disadvantages of the various agreements, and key terms to consider from the perspective of both buyers and sellers.

Before engaging in serious deal discussions, M&A parties will want to consider entering into various agreements that will protect their interests and set the tone for future negotiations.

Term sheets and LOIs formalize the initial state of negotiations and the important business points relative to the contemplated transaction, such as the purchase price and transaction structure. These documents are useful to identify important issues between the parties early in the process and they provide a road map for deal structure and the key terms for future documentation.

Before proceeding with due diligence and providing confidential information, the seller will want assurances that the information it provides will remain confidential and not be used in a competitive manner. Confidentiality and non-disclosure agreements ensure that sensitive information of the parties is kept confidential and only used to evaluate a potential deal. Sometimes confidentiality and non-disclosure terms are contained in the LOI, but more often these terms are contained in a separate agreement.

Exclusivity terms require sellers to negotiate with a single buyer and not entertain discussions or negotiations with other potential buyers during an agreed upon timeframe. There are key factors for buyers and sellers to consider when agreeing to the terms of an exclusivity agreement, particularly the length of the exclusivity period. These are generally included in an LOI but can be a separate agreement.

Listen as our authoritative panel reviews the importance of preliminary agreements in M&A transactions and provides an overview of how these agreements are used to ultimately structure and form the deal.