The SPA targets closing within 90 days of signing, subject to Conditions Precedent (CPs): competition approval, investment approvals for foreign investors… At day 90, competition clearance is still pending — the authority has requested supplements three times. One side wants extension, the other wants to walk. Extend or kill? A decision framework.
Legal basis
- Civil Code 2015, Articles 385, 401, 428: contracts and termination — extension/termination rights on unmet CPs turn on the SPA; past the long-stop date with CPs unmet, parties may walk from closing.
- Competition Law 23/2018/QH14 + Decree 35/2020/ND-CP: economic-concentration notification procedures — competition review is usually the most time-consuming CP.
- Investment Law 143/2025/QH15 (replacing 61/2020/QH14 from 01/3/2026): investment policy approvals and registrations for foreign investors.
Common CPs and realistic timelines — 5 groups
1. Concentration approval: 30-day preliminary + 90-day official review (extendable) under Decree 35/2020 — realistically 3–6 months with supplements.
2. Foreign-investor investment approvals: policy approvals/registrations under Investment Law 143/2025 — 1–3 months depending on project and locality.
3. Third-party consents: banks (mortgaged-asset transfers), key contract counterparties (change-of-control clauses)… — unpredictable, goodwill-dependent.
4. No MAC: no material adverse change during interim — “automatic” but disputable (see EXP-6208).
5. Warranties true at closing: R&W still accurate at closing — discovered breaches mean this CP fails.
Extend or kill — 4-question framework
1. Are remaining CPs achievable? Mere procedural delays (authority processing, near completion) → extend. Near-impossible CPs (rejection signals, uncooperative third parties) → consider killing.
2. Is the deal still attractive? Reassess deal value after delays: market shifts, target deterioration… If the deal’s “gone stale”, the long-stop date is a lawful “exit” — but check efforts duties (hell-or-high-water vs best efforts) before using it.
3. Who’s responsible for unmet CPs? If a party didn’t diligently pursue its CPs (e.g., buyer late-filing competition notifications), the other side may claim breach damages — not just kill the deal.
4. Opportunity cost of waiting: 3–6 more months burn advisory fees, “hang” teams, destabilize the target — versus deal benefits. Sometimes timely termination beats reluctant extension.
Extending properly — 5 points
1. Written extension: sign SPA amendments extending the long-stop date — never oral. 2. Conditional extension: tie to specific CP progress (e.g., 60 more days for competition clearance, not open-ended). 3. Added protections: use extension leverage for more protection (higher escrow, updated warranties…). 4. Ticking fees: the extension beneficiary pays the other side — international practice creating completion incentives. 5. Post-extension termination rights: specify whose termination right applies if extended time expires with CPs still unmet.
How long should long-stop dates be?
Per heaviest CP: competition-approval deals 6–9 months; simple deals 3–4 months. Too short forces repeated extensions (losing momentum); too long “hangs” the target. Set long-stop = expected CP completion + 2–3 month buffer.
One side deliberately “sits on” CPs awaiting long-stop expiry?
Breach of SPA efforts covenants — the other side may claim damages rather than let the deal “die naturally”. Gather evidence of non-effort (unfiled applications, ignored supplement requests…) for damage claims.
Competition CP: who files?
Usually the buyer (or both jointly) notifies the National Competition Commission. SPAs should specify filing duties, deadlines (e.g., 10 business days post-signing), and information-cooperation duties — late filing is the most common cause of this CP’s delay.
Does long-stop termination require compensation?
In principle no — unmet CPs at long-stop let parties walk without compensation (unless efforts-duty breaches). That’s the long-stop’s “safe exit” function. Check the SPA: some impose termination fees even for CP-driven termination — don’t overlook this.
Partial closing with some CPs unmet?
CPs condition the entire closing in principle — but parties may agree partial closing or waive non-material CPs. Waiver belongs to the CP’s beneficiary; waive in writing and carefully — waiving means accepting that CP’s risk.
Contact FLAT Law Firm
FLAT Law Firm advises M&A parties: designing CP and long-stop provisions, handling missed CP deadlines, and negotiating extensions. Contact us when CPs risk delay — 30 days early beats at-expiry firefighting.
This article has been quality-reviewed by the FLAW AI Legal Council
