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In: Finance

What are non assignment clauses with reference to mergers?

What are non assignment clauses with reference to mergers?

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Expert Solution

Non assignment clauses are also known as anti assignment clauses. This anti assignment clause will be expressly prohibiting assignment of contractual right without the consent of other party of the contract so these will be anti assignment contract which will be typically taking one of the two forms-

A. first form will be simple anti assignment clauses which will be simply prohibiting the contractual right from being assigned without the consent of other party and these simple anti assignment clauses are generally enforcible in nature.

B. The Other form ofanti assignment clauses is comprehensive anti assignment provision in which main contract will be including more robust anti assignment provision design to required third party consent prior to merger and acquisition event and where the content itself will not be transferred, these comprehensive anti assignment clause might be there.

When assignment of contract with comprehensive anti assignment provisions, target must be seeking the consent of counterparties to each such contract and obtaining third party concent in connection with merger and acquisition transaction may be creating sticky situations or may cause costly delay sometime, so these are the both types of simple and comprehensive anti assignment clauses.


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