No-Shop Clause

AAA

DEFINITION of 'No-Shop Clause'

A clause in an agreement between a seller and a potential buyer that bars the seller from soliciting a purchase proposal from any other party. In other words, the seller cannot "shop" the business or asset around once a letter of intent or agreement in principle is entered into between the seller and the potential buyer. A no-shop clause is generally only in effect for a finite period.

INVESTOPEDIA EXPLAINS 'No-Shop Clause'

A no-shop clause is very useful from the potential buyer's point of view, because it can prevent the seller of the business or asset from soliciting other offers, which may lead to a higher purchase price or bidding war if there are multiple interested parties. On the other hand, the seller may not want an unduly long no-shop period, especially if there is a risk that the potential purchaser will walk away from the deal during or upon completion of due diligence.

RELATED TERMS
  1. White Knight

    A white knight is an individual or company that acquires a corporation ...
  2. Mergers And Acquisitions - M&A

    A general term used to refer to the consolidation of companies. ...
  3. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  4. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
  5. Acquiree

    The company that is being acquired or purchased in a merger or ...
  6. Lilly Ledbetter Fair Pay Act

    A federal law designed to ensure equal pay for all workers, regardless ...
Related Articles
  1. Fundamental Analysis

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  2. Investing Basics

    The Merger - What To Do When Companies Converge

    Learn how to invest in companies before, during and after they join together.
  3. Options & Futures

    Owners Can Be Deal Killers In M&A

    A merger and acquisition advisor is often the best choice when selling a company.
  4. Forex Education

    Mergers & Acquisitions: An Avenue For Profitable Trades

    When major corporate transactions have a big impact on the currency markets, you can benefit.
  5. Entrepreneurship

    Why Successful Business Owners Sell Out

    Learn the motives that drive companies into the arms of an acquirer.
  6. Economics

    The Economic Impact of Better US-Cuba Relations

    We examine what the normalization of relations between the US and Cuba will mean for the two countries' economies.
  7. Savings

    I’m twice divorced –-can I still collect spousal benefits?

    Unsure if you’re eligible for spousal benefits if you’re divorced –more than once? Rob Kron from Blackrock gives a simple answer.
  8. Stock Analysis

    Breaking Down the Halliburton Baker Hughes Deal

    Halliburton is using a downturn to get bigger and stronger in the long term, and the company is getting Baker Hughes at a reasonable price as a result.
  9. Forex

    Bitcoin's Main Stumbling Block: Navigating The Law

    Coders created Bitcoin to be decentralized and independent of governments and banks. Authorities are still struggling to create a legal framework.
  10. Credit & Loans

    5 Things Debt Collectors Can't Do To You

    You may owe money, but you still have rights. There's a long list of things debt collectors are banned from doing to you. Know what's illegal.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center