M&A Series Part 9: Third-party agreements

Top 10 negotiated points in a bank transaction: Third-party agreements

Editor’s note: This month, BankBeat takes a magnifying glass to the merger and acquisition activity underway in the community banking industry. Anton J Moch and Erik Didrikson, attorneys working in the community banking group of Winthrop & Weinstine P.A., Minneapolis, have created a 10-part series for BankBeat, to unpack the considerations bankers must take into account when negotiating a bank deal. Previous installments covered purchase pricepayment termsthe financial condition of the bankpost-closing liability, earnest money and break-up feesnoncompetition provisionsrepresentations and warranties, and operational covenants. Here is the ninth installment.

Day 9. Third-party agreements.  For day two of the “special contract provisions” discussion, we will cover the treatment of third party vendor agreements, and the allocation of payments for any fees that may arise out of the disposition of those. Vendor termination or change in control fees can be significant; who bears the burden of these fees can become a contested point in transactions. This can be further complicated by the anticipated post-closing conversion of seller’s operations and the vendor’s willingness to work with both parties in the assignment or termination of any given agreement. Ultimately the resolution of this issue is often subject to the current status of a seller’s vendor agreements, as well as the parties’ relative negotiating positions.    

Erik J. Didrikson
Anton J Moch

Anton Moch and Erik Didrikson are members of the Winthrop & Weinstine, P.A., community banking group, and are some of the most active and experienced bank transaction legal advisors in the nation. Since 2014, Winthrop has served as chief legal counsel to parties completing the purchase, sale or merger of over 30 banks, bank holding companies and bank branches. Winthrop’s dedicated team of transaction attorneys is annually recognized as tier-one legal advisors to banks on bank transactions as well as corporate governance issues, capital issues, regulatory issues and a wide range of senior management legal issues. Contact Tony at [email protected] or 612-604-6671, or Erik at [email protected] or 612-604-6536.

Attend Anton’s upcoming presentation titled, “Soft” Factors to Consider When Selecting an Acquisition Candidateon Mon., Oct. 1 at the Bank Holding Company Association Fall Seminar, “Buy, Sell or Hold: More Strategies for Success,” in Minneapolis. Winthrop & Weinstine, P.A., is also proud to be a Diamond Level Sponsor at this event. To learn more or to register, visit theBHCA.org.