No-Shop and Go-Shop Clauses Explainer
No-shop and go-shop clauses govern whether a company may seek or discuss alternative acquisition proposals after signing a deal. A no-shop generally restricts active solicitation while preserving negotiated duties to consider certain unsolicited offers. A go-shop provides a limited period in which the target may actively seek competing bids.
The provisions define permitted contacts, information access, notice requirements, board recommendation changes, matching rights, and termination fees. Fiduciary-out language addresses circumstances in which directors may respond to a superior proposal or other developments while still following the contract’s procedures.
A no-shop increases closing certainty for the initial buyer, which has spent money negotiating and conducting diligence. A go-shop may be used when the pre-signing process was narrow or speed was important, giving the target a later market check. Neither structure guarantees that another bidder will appear.
The practical effect depends on timing, fee size, matching rights, information obligations, and how quickly a rival can complete diligence. Boards and investors should evaluate the entire package rather than the label. A theoretically open process can still be difficult for a competing bidder if the window is short or remedies are costly.
The target usually cannot seek new bids after signing.
Qualified unsolicited proposals may still receive attention.
The target may actively seek alternatives for a limited period.
A later bidder still needs time and financing.
Fees, matching rights, notice, and timing shape real competition.
The clause name alone can mislead.
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