Answers / M&A Advisory

Explain no-shop, go-shop, and fiduciary-out provisions, and the tension they manage.

A core M&A Advisory interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.

THE SHORT ANSWER

These deal-protection terms balance the buyer's wish for certainty against the target board's duty to get the best outcome for shareholders. A no-shop bars the target from soliciting or negotiating competing bids after signing — protecting the buyer. A go-shop carves out an initial window (say 30–45 days) during which the target may actively solicit higher offers, common in private-equity take-privates to market-check the price after signing, often with a lower break fee for a deal that emerges from the go-shop. A fiduciary-out lets the board, despite a no-shop, respond to and accept a genuinely superior unsolicited proposal if its fiduciary duties require — usually subject to a matching right for the original buyer and a break fee. The tension is deal certainty vs the board's fiduciary obligation; the negotiated package (no-shop scope, go-shop length, break-fee size, matching rights) sets where the balance lands.

WHAT INTERVIEWERS LISTEN FOR

  • ✓No-shop: can't solicit competing bids — buyer protection
  • ✓Go-shop: initial window to actively seek higher offers (often lower break fee)
  • ✓Fiduciary-out: board may accept a superior proposal despite no-shop
  • ✓Balances deal certainty vs board fiduciary duty; matching rights/break fees

COMMON MISTAKES

  • ✗Confusing no-shop and go-shop
  • ✗Not knowing the fiduciary-out/matching-right interplay
  • ✗Ignoring break-fee linkage

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