T° TenderOffer.co
Comparison

No-shop vs go-shop clauses

A no-shop prohibits the target from soliciting competing bids. A go-shop gives the target an active window to solicit competing bids after signing.

Attribute No-shop clause Go-shop clause
Target's posture Cannot actively shop the deal Can actively contact and engage with competing bidders
Window From signing to closing Defined window after signing (typically 30–60 days)
After window expires N/A — no-shop runs the entire time Reverts to no-shop with fiduciary out
Break-up fee Single tier (typically 2–4%) Two-tier — lower fee during go-shop, higher after
Match rights Original bidder typically gets matching rights for any superior proposal Same — match rights typically apply throughout
Typical use Strategic deals with full pre-signing process Sponsor LBOs and management buyouts where pre-signing market check was limited
Revlon implication Pre-signing process must satisfy Revlon Provides post-signing market check that supports Revlon defense
Likelihood of competing bid Low — passive market check only Higher — active bidder outreach by target's bankers

When the comparison matters

The no-shop / go-shop choice is one of the most heavily-negotiated points in any merger agreement. It bears directly on the board’s Revlon obligations to maximize price and on the bidder’s deal-protection economics.

Why go-shops emerged

In sponsor LBOs and management buyouts, the bidder often has informational advantages that prevent a competitive pre-signing auction. A go-shop window addresses Revlon concerns by allowing the board to actively test the market for higher bids after the deal is signed — even at the cost of slightly higher topping-bid risk for the original sponsor.

Two-tier break-up fees

A typical structure: 1.5% during a 30-day go-shop, 3% after. The lower go-shop fee is intended to make competing bids economically viable; the higher post-window fee deters topping bids once the market check is complete.

Guides

Glossary