M&A Foundations · glossary
A condition precedent, or CP, is something that must happen before the parties have to complete. In a share sale it is usually an approval, for example from a competition authority or a financial regulator. The deal is signed first, then waits until every CP is met or waived, or until the long stop date passes.
Something that must happen before completion is required — most commonly a regulatory or competition approval. If the conditions are not satisfied by the long stop date, either party can usually walk away from the signed deal. Clause 5.1 · Chapter 13
Explained in Chapter 13, Signing to Completion, of M&A Foundations.
Also explained in Legal Due Diligence and Venture Deals.
Whatever the reason, the mechanics are the same. The SPA lists conditions precedent: things that must happen before either side is obliged to complete. The wait between signing and completion is known as the gap.Read Chapter 13, Signing to Completion →
Every chapter of M&A Foundations is free to read, including the full training share purchase agreement.
A condition in the share purchase agreement that must be met before completion. Common ones are merger control clearance and a regulator's approval of a new owner. If a CP is not met by the long stop date, either side can usually walk away.
In a loan, the list of every document the agent must have before the borrower can draw, such as board minutes, legal opinions and identity checks. The borrower's lawyers keep it up to date, and the agent confirms each item.
Related terms
Where this term lives
This term is part of one complete fictional deal, with every document attached and a test after every chapter. Open M&A Foundations → · All terms A–Z →