July 24, 2018
A Q3 Torys Quarterly article that examines three strategies private equity funds are implementing in order to deploy unfunded capital has been publishing in PE Hub Canada.
“Winning the Bid: Investor Strategies in Hot Auctions”—which originally appeared as a part of the Q3 summer edition of the Torys Quarterly—was co-authored by parterns Stefan Stauder, Michael Akkawi, Amanda Balasubramanian, Jonathan Wiener, and counsel Sophia Tolias.
A small expert of the article is below.
Some prospective buyers will also consider a locked box structure to enhance price certainty for the seller. In the last year, we have seen a notable uptick in the use of this structure.
With a locked box structure, the purchase price is fixed at signing. From that date onward, the “box is locked,” and the risks and rewards of the target business are transferred to the buyer.
Robust interim covenants for the period between signing and closing are negotiated to ensure no value leakage from the target to the seller and that operational risk is mitigated. The locked box structure has the advantage of offering price certainty at signing and relieves the parties from negotiating purchase price adjustments and potential related disputes post-closing.
You can read more from the Q3 Torys Quarterly, which includes articles on board dynamics, deal terms, trade, privacy, litigation trends, socially responsible investing and more.