Go Shop Period

Written By
Paul Tracy
Updated June 21, 2021

What is a Go Shop Period?

A go shop period is a window of time during which public companies can solicit competing purchase offers.

How Does a Go Shop Period Work?

Let's say Company XYZ is for sale. It receives an offer of $25 per share from Company ABC. Company ABC agrees to give Company XYZ a go shop period. During that time (let's say it's 45 days, though go shop periods typically range from 20 to 50 days), Company XYZ talks with other possible acquirers and receives two more offers: one from Company 123 for $27 per share, and one from Company DEF for $26.50 per share.

At this point, Company ABC can either match the offers, exceed the offers, or walk. Depending on the terms of the go shop period, if Company XYZ does not receive any offers that are better than $25 per share, it may have some obligation to proceed with the sale or else pay Company ABC a break-up fee (also called a termination fee).

Why Does a Go Shop Period Matter?

The go shop period sounds risky for Company ABC in our example, but really it is a way to prevent shareholder lawsuits that may surface should the deal with Company XYZ proceed. That's because Company XYZ shareholders might claim that Company XYZ's board did not fulfill its fiduciary duty by shopping the company around to get the best possible sale price. These legal claims and potential liabilities are something that Company ABC might inherit should it proceed with the purchase of Company XYZ, so it is also in Company ABC's best interests to allow a go shop period.

For companies interested in submitting offers during a go shop period, the pressure can be excruciating because the period is often too short to perform meaningful due diligence on the target. Accordingly, some go shop agreements include a provision that would allow Company XYZ to continue negotiating with another bidder after the go shop period expires if the other bidder is truly serious about the acquisition.

Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Go Shop Period.
Be the first to ask a question

If you have a question about Go Shop Period, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Go Shop Period, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Go Shop Period

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms