PlumBot: Bot: Creating new article from JSON

2026-03-15T15:36:40Z

Bot: Creating new article from JSON

New page

🚫 '''No-shop clause''' is a provision in a [[Definition:Letter of intent (LOI) | letter of intent]], [[Definition:Memorandum of understanding (MOU) | memorandum of understanding]], or preliminary agreement that prohibits the seller of an insurance business from soliciting, encouraging, or entertaining competing acquisition proposals for a defined period while the prospective buyer conducts [[Definition:Due diligence | due diligence]] and negotiates definitive transaction documents. In insurance [[Definition:Mergers and acquisitions (M&A) | M&A]], where targets may include [[Definition:Insurance carrier | carriers]], [[Definition:Managing general agent (MGA) | MGAs]], [[Definition:Insurance broker | brokerages]], or [[Definition:Third-party administrator (TPA) | TPAs]], the clause protects a buyer that is investing significant time and resources into evaluating complex regulatory, actuarial, and operational matters from being undercut by a rival bidder.

📐 The clause typically specifies that the seller will not — directly or through advisors — initiate contact with potential alternative acquirers, share confidential information with third parties for acquisition purposes, or negotiate parallel transactions. Some agreements include a "window-shop" or "go-shop" variant that permits the seller to passively receive unsolicited offers or actively canvass the market for a limited post-signing period before the restriction locks in, but a pure no-shop forecloses even passive engagement. In insurance transactions, the restricted period is often calibrated to the time needed for [[Definition:Regulatory approval | regulatory approvals]] — which can be lengthy given that insurance supervisors in jurisdictions like the U.S. (state-level [[Definition:Change of control approval | change-of-control]] filings), the UK ([[Definition:Prudential Regulation Authority (PRA) | PRA]] and [[Definition:Financial Conduct Authority (FCA) | FCA]] review), or the EU (national competent authority assessments under Solvency II) each impose their own timelines and information requirements.

🎯 For buyers, the no-shop clause is a crucial deal-protection mechanism that justifies the expense of actuarial reviews, [[Definition:Reserve study | reserve studies]], IT system assessments, and regulatory pre-filings that characterize insurance acquisitions. Without it, a buyer risks completing its diligence only to find the seller has leveraged its offer to extract a higher price from a competitor — a dynamic particularly common in competitive auction processes for well-performing insurance portfolios or high-growth [[Definition:Insurtech | insurtech]] platforms. Sellers, in turn, negotiate the duration and scope carefully, sometimes securing a break fee or reverse break fee to ensure that if the buyer walks away, the seller is compensated for the period during which it was locked out of the market. The interplay between the no-shop clause and regulatory timelines makes this provision especially consequential in cross-border insurance deals where approval processes can extend for many months.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Letter of intent (LOI)]]
* [[Definition:Break fee]]
* [[Definition:Exclusivity agreement]]
* [[Definition:Due diligence]]
* [[Definition:Change of control approval]]
* [[Definition:Non-binding offer (NBO)]]
{{Div col end}}

Definition:No-shop clause - Revision history

PlumBot: Bot: Creating new article from JSON