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Drop Dead Date
Practical Law Glossary Item 3-382-3423 (Approx. 2 pages)
Glossary
Drop Dead Date
A specified date by which a transaction agreement will terminate if the transaction is not closed and a party elects to terminate the agreement. Drop dead dates are commonly included in M&A transactions. A drop dead date can be included for various reasons, including:
- One or both parties want the transaction to be closed before the fiscal year end, or any other relevant accounting period, so that it can be reflected in the annual or other financial statements.
- Certain events outside the parties' control (such as a change in law) require the transaction to be completed by a specified date.
- The parties want the freedom to look for alternative deals if the transaction takes too much time to close due to regulatory issues, pending litigation or absence of third-party consents, for example.