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Warren Buffett's Kind of Deal - NYTimes.com


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The reason is that there is no “go-shop” provision, which allows the company to search for other bidders after the deal is announced. Go-shop provisions are common in private equity deals, and even some strategic ones, because they allow a target to negotiate with only one bidder before announcing a deal. After the deal is announced, the target will do a market check and see whether if there are any other bidders. If a bidder comes along, the termination fee that it would pay to acquire the company would be lower than if there were no go-shop provision.There are good reasons for this type of mechanism. First, it allows the board to feel comfortable that it is getting the best price reasonably available. Second, while a go-shop provision is not mandated under Delaware law, companies feel that it helps them satisfy their so-called Revlon duties, which require a board to get the highest price reasonably available in a sale of the company.

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