A condition precedent is a contractual provision that suspends the completion of a transaction until a specified future event occurs. In SPAs, the most common conditions precedent are: obtaining antitrust clearance, lender consent for change of control, minority shareholder approval, or the absence of a material adverse change. Between signing and closing, the parties are contractually bound but the transaction is not finalised. If the condition is not satisfied within the agreed timeframe, the affected party may withdraw or invoke the break-up fee.

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Example: the sale of a Swiss distribution group for CHF 40.0 million is signed subject to two conditions precedent: (1) COMCO approval within 90 days, (2) main bank consent for the change of control. COMCO renders its decision in 65 days, the bank consents in 30 days — both conditions being satisfied, closing proceeds on schedule within the contractual longstop date.

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Hectelion identifies and monitors conditions precedent in every transaction to ensure their timely satisfaction and manage the associated risks.