Standstill Agreement Means

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A standstill agreement can be included in the standard language associated with a confidentiality agreement that a potential bidder must sign for a company before they can view a company`s due diligence documents. The inclusion of this clause in the contract prevents the bidder from carrying out hostile acquisition activities upon the expiry of a friendly sales contract. Another type of standstill agreement is in place when two or more parties agree not to deal with other parties on a given issue for a given period of time. For example, as part of a merger or acquisition negotiation of target buyers and potential buyers, they may agree not to solicit or participate in acquisitions with other parties. The agreement strengthens the parties` incentives to invest in negotiation and due diligence, while respecting their own potential agreement. The concept of standstill agreement refers to different forms of agreements that companies may enter into to delay measures that might otherwise take place. A standstill agreement is a contract that contains provisions governing how a bidder of a company can buy, sell or vote shares of the target company. A standstill agreement can effectively delay or stop the hostile takeover process if the parties cannot negotiate a friendly agreement. A status quo agreement may also exist between a lender and a borrower if the lender stops requiring a planned payment of interest or principal for a loan, in order to give the borrower time to restructure their debts.

More generally, standstill agreements can be used to stop a transaction for a set period of time. For example, a lender and borrower may agree to stop paying off debt for a set period of time. A status quo agreement is an agreement that preserves the status quo. It is an agreement between the objective and the bidder that prevents the bidder from making an offer to purchase the targeted company without first obtaining the bidder`s consent. It can be included in the confidentiality agreement as a provision and is executed before receipt of the due diligence material. A standstill agreement aims to prevent hostile bids and offers a possible remedy if the bidder uses confidential information to make a hostile bid if the parties fail to reach a mutual agreement on the terms of sale. . .

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