Definition
A standstill agreement is a contract in which a party agrees not to:
- Acquire additional shares above a defined cap
- Solicit proxies in opposition to the target board
- Make tender offers
- Form groups with other shareholders to influence control
- Take other defined hostile actions
For a defined period (typically 1–3 years).
Common contexts
- Activist settlements — activist agrees to standstill in exchange for board representation
- White squire arrangements — squire agrees to standstill in exchange for being permitted to take a large minority position
- NDA-attached standstills — would-be acquirers receiving target confidential information often must sign standstills as a condition
- PE auction processes — bidders agree to standstill during diligence
Why they matter
Standstills are key risk-management tools for targets — they prevent strategic counterparties from later turning hostile after gaining inside knowledge or a foothold.