Trigger threshold

A trigger threshold (seuil de déclenchement) is a predefined level of a financial or contractual variable whose breach automatically activates contractual consequences — early repayment, conversion, rights modification or option exercise. Common M&A trigger thresholds include: financial covenants (leverage ratio breach → accelerated repayment), anti-dilution provisions (down round below reference price → conversion price adjustment), liquidation preferences (exit below threshold → preferred payout), and earn-outs (EBITDA above target → additional payment triggered).

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Example: a shareholders' agreement provides that the drag-along clause is triggered only if the acquisition offer exceeds CHF 40 per share (1.5x the entry valuation). At CHF 38 per share, drag-along cannot be activated — minority shareholders cannot be forced to sell. At CHF 42 per share, the threshold is crossed and the majority shareholder can exercise drag-along to deliver 100% of the capital to the acquirer.

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Hectelion maps all trigger thresholds in due diligence and shareholder agreement review to chart precisely the conditional rights and obligations of each party.