IACCM Contract Management Forum

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2018-01-25 14:59:58

Acquisition of Companies

Hi All, I'm interested to know what steps you take when a company notifies you of an acquisition? We get a lot of requests to move the contract and invoices to new entity since the existing contract holder is no longer in a position to pay for services (been absorbed / no longer trading under contracted name). We do our checks to make sure it's a legitimate request so I understand the need to transfer the contract but is there a standard way of dealing with these types of requests to avoid potential risks?

I know a novation would not be appropriate as we would be unable to obtain Director signature of a company that no longer exists. What other methods are available?

 •   2018-01-29 03:21:57
You must be very careful here, as the merger/acquisition does not always lead to a completed transaction. If the merger/acquisition does not complete, the co-mingling and sharing of documents could result in risks such as violation to confidentiality as well as regulatory violations. It is often beneficial to consider a "clean room" approach where the contracts and other documents are brought into a third-party environment, or clean room, for review, analysis, comparison and contrast. If the merger/acquisition is abandoned, the documents are returned to the original owner without the other party having seen the documents. The third party clean room operator is precluded from sharing information between the parties. this technique allows due diligence to proceed insulated from many of the risks.
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