No-Shop and Go-Shop Clauses

A “no-shop” clause prevents a target from soliciting competing offers. This clause
is combined with a fiduciary-out clause, which entitles the target’s board to
consider unsolicited alternative transactions (sometimes referred to as “window
shopping”) to the extent necessary to fulfill its fiduciary duties. Before a target
exercises its fiduciary out, it may give the incumbent bidder a chance to match the
competing offer.

Some deals, particularly those involving financial buyers, also include a
“go-shop” feature, which gives a target a specified period of time – usually 30
to 60 days after signing a transaction agreement – to actively seek out a highervalue
transaction. A target may negotiate a go-shop if an auction has not been
conducted and the board believes, in exercising its fiduciary duties, that it needs
to check the market to ensure that the price agreed to with the incumbent
acquiror represents the maximum value obtainable in the circumstances. A noshop
period will begin once the go-shop period ends.