The correct option is (c) Go-shop provision.
After a Decision analysis (DA) has been signed, the target firm is permitted to seek a greater price from another buyer under the "go-shop" clause. In targeted auctions or one-on-one discussions, more prevalent.
<h3>What is Go-shop provision?</h3>
An arrangement known as a "go-shop period" enables a publicly traded company to look for rival bids even after it has previously accepted a solid offer. The initial offer then serves as a starting point for potential superior offers. A go-shop session often lasts between one and two months.
Some features of go-shop provisions are-
- During the go-shop phase, the target firm may be able to secure a better bargain for its shareholders.
- The floor value in an M&A deal with a go-shop period refers to the original acquirer's offer.
- Due to the paucity of time for potential suitors to research the target company, higher bids seldom surface during a go-shop period.
- Example: Argo Infrastructure Partners, LP stated that it would buy Corning Natural Gas Holding Corp. A 45-day go-shop period is outlined in the acquisition agreement.
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The complete question is -
Company X agrees to purchase Company Y in a privately negotiated sale. Which provision of the Definitive Agreement would allow Company Y to achieve a higher purchase price?
A. White knight clause
B. No-shop provision
C. Go-shop provision
D. Material adverse change clause
