Interim
Periods
and Outside
Dates

SUMMARY

The interim period measures the span of time between signing (its commencement) and closing (its termination) in a staggered sign-and-close transaction.

MINIMUM DURATION

In certain transactions with debt financing, the buy-side will require a period of time following signing to market the debt securities required to fund the transaction. This marketing period typically extends for 15 to 20 business days, and also has customary non-holiday blackout windows. 

Where a marketing period is relevant, closing cannot in any event take place before the period’s expiration, even if all closing conditions have been satisfied.

MAXIMUM DURATION

The maximum duration of the interim period is set by the outside (or drop-dead) date, which appears in the termination provisions of a main transaction agreement. If the closing conditions have not been satisfied by then, one or more transaction parties may be able to abandon the transaction.

Parties sometimes provide that the outside date will automatically extend if certain milestones have been achieved, like satisfying all closing conditions other than specified regulatory consents.

NEGOTIATIONS

The duration of the interim period is a negotiated point that depends, in part, on the expected time it will take the parties to satisfy the closing conditions.

For example, if the only material closing condition is a simple pre-closing reorganization involving no third parties, then an interim period lasting only a few days might suffice so long as there is no marketing period.

However, if significant regulatory approvals from different authorities around the world are required, an interim period of several months (even exceeding one year) may be appropriate.