I am working on a very interesting transaction involving the acquisition of a business and some assets based overseas for a large consideration. My client has an excellent relationship with the sellers – built up over many years. One of the sellers wants to remain with the business that is being acquired and another part of the seller’s business will be granted a long term distribution deal. In other words, there will be an ongoing relationship with the sellers.
When discussing the structure of the deal, my client said – not altogether tongue in cheek – do not draft something that will frighten them away!
This is not only because of the relationship the parties have (the “trust” word was even used!) but also the sellers are based overseas and have a different approach to documenting a deal. That approach means, according to my client who has also spent a long time working overseas, the contractual negotiation and resulting documents are not done in UK or US style. In fact, the expectation is not to have very long agreements (partly reflected by local laws) and to enter into the negotiations and an agreement expecting each party to do what they said they would do.
This creates difficulties for the adviser. I have also worked a lot overseas on contractual negotiations and learnt very early on that, even though English law (and lawyers!) have a very good reputation, we do not know it all. In addition, the approach in each jurisdiction changes even between neighboring countries in continental Europe.
In my view, a lot of English law agreements are overlong because they contain lengthy provisions which are not relevant to the deal and/or which duplicate points which could have been said more succinctly. Precedents have developed in this way because it is “safer” to throw everything in and avoid the mistake of leaving something out. This can create tensions with the client and, just as bad, with the other party.
For some deals, it is appropriate to have the “Full Monty” documentation. However not always. In the deal I am working on my challenge is to draft an agreement that works for both parties, is much shorter than I might otherwise start with (making sure my client is informed regarding the risks associated with this approach) and is signed by the sellers so the deal is done. These are more difficult documents to draft but often more satisfying provided they result in completion!
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