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After months of planning, negotiation and drafting, the sale and purchase of a carve-out business with operations around the world often snaps into focus with the signing of a global purchase agreement. Press releases may be issued, the parties and their myriad advisers may rest briefly and even congratulate one another. But this milestone is really only something akin to two strangers, having met and measured the other’s worth, agreeing to set off together, albeit on binding terms, for a far-off destination that they have only etched out in their minds and in their contract: a global closing.

The challenge in selling or acquiring a carveout business is that the target business may be commingled around the world with other business units that the parent company intends to retain. As a result, the target business often needs to be separated, either at or prior to a global closing. This separation generally involves a combination of equity and asset transfers in jurisdictions around the world to effectively “package up” the target business for sale (in the context of a preclosing reorganization), or to deliver the business directly to the buyer at closing (in the context of a direct sale). As such, getting to global closing in a carve-out transaction often requires successfully navigating a series of local closings around the world — a daunting task even before the world became a patchwork of different local and national lockdowns and work restrictions related to COVID-19.

In this article, we describe some of the key drafting considerations for local transfer agreements in the context of a global carve-out transaction, as well as issues that buyers and sellers should consider in connection with these agreements. It is worth noting at the outset that our specific focus in this article, preparation of effective local transfer agreements, is only one of several important legal considerations at the outset of the implementation phase in a carve-out transaction.

* Originally published in Deal Lawyers


Daniel De Deo is an associate in Baker & McKenzie’s Global Environment & Climate Change practice. He has previously worked on secondment with a major global investment bank, where he advised on derivative trading agreements for emissions and other commodities, as well as structured transactions in emissions, renewable energy and renewable energy credits.


Jenny Cannan is an associate in the Firm's Washington office, where she is a member of the Corporate and Securities Group. Jenny advises clients on international and domestic transactional matters, including mergers and acquisitions, corporate governance, securities regulations, cross-border transactions, and global corporate reorganizations.


Hilary F. Polak is an associate in Baker McKenzie’s Washington, DC Corporate & Securities Practice Group. Hilary began her career with the Firm as a summer associate in the Washington, DC office. Hilary represents both US and international clients on a wide range of corporate and securities law matters. She is also active in the Firm’s pro bono practice.