What is "no-shop agreement" in the covenant partners?

no shop,  pact partners





If you are an entrepreneur looking for funding, ideally have many candidates. But at some point they will pose a clause "no-shop".

To get to close a funding decision should be made by an investor who will request a commitment “no-shop”: This clause is similar to the following text:

"The company and its partners are committed to:

Either directly or indirectly, 1.- Request, start, promote or attend any proposal, negotiation or offer from another person or entity other than "investor" in relation to the sale or capital of the company or the acquisition, purchase, rental, license or other disposition of the company or its assets. 2.- Participate in any discussions or negotiations concerning the matters indicated in the previous section, and shall notify "the investor" means any application relating to such third party materials. In the event that the company and the investor agreed not to conduct investment, the company is exempted from the obligation under this clause. "

This clause arises when there is an agreement and want to prevent more turns to make themselves negotiating.

It is advisable to add Deadline a temporary one as the months, so that in the case of "give no answer" there is no linkage, no one is left trapped. I usually recommend the time period for ALL my clients (from a contract, on a budget, a discount). The time period must be mutually.

Although the clause "no-shop"Essentially linking the entrepreneur, this is not too serious, provided that enter the time. It is convenient to agree that if "the investor" discard cart, if you open them immediately to the startup de compromiso no-shop, so no need to wait the full term.

If the investor has referred a clause "no-shop"Very soon, before having some agreement, should light the alarm light.

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