Termination Triggering Events in M&A Transaction Agreements

Summary

This practice note discusses the events that may trigger a party's right to terminate an acquisition agreement in a merger or other acquisition transaction. There are a number of events that may give rise to a termination right. These will vary depending on what is relevant to the particular transaction and are generally linked to the closing conditions for the transaction. Almost all agreements, regardless of whether the transaction is structured as a stock purchase, asset purchase or merger, will include the following: (1) a mutual right to terminate for any reason; (2) a termination right of each party relating to the other party's breach of its representations, warranties, covenants, or agreements; (3) a mutual termination right relating to any legal impediments to consummating the transaction; and (4) a mutual right to terminate in the event the closing conditions are not satisfied by an agreed date. These and other triggering events that commonly apply in M&A transactions are ...