Private Equity 2026 Comparisons

Nigeria has remained West Africa’s most active market for mergers and acquisitions (M&A) and private equity (PE) over the past 12 months, according to DealMakers AFRICA in its Q1 2026 Report, and continues to account for the majority of announced transactions in the region. PE deal activity was driven primarily by regulatory-led consolidation in the financial sector, particularly in response to recapitalisation mandates.

A number of international oil companies divested their non-core upstream assets, with indigenous operators emerging as the principal acquirers. Beyond financial services and energy, PE activity has focused on businesses with proven demand, recurring revenue and credible growth prospects, as these characteristics support predictable returns and attractive exit opportunities.

Market Activity Per Sector

PE activity in Nigeria has remained strongest in the financial services, fintech, energy, telecommunications, pensions, healthcare and consumer sectors.

• Financial services: Financial services, particularly banking and insurance, have remained the most active sectors for PE investment. Following the Central Bank of Nigeria’s (CBN) 31 March 2026 recapitalisation deadline, banks raised capital through private placements, rights issues, public offerings and other business combinations, which significantly strengthened their capital bases. The insurance sector experienced similar activity following the introduction of the Nigerian Insurance Industry Reform Act 2025, with insurers turning to PE to close capital gaps.

• Pensions: The pension industry has likewise recorded consolidation activity. The National Pension Commission’s (PenCom) September 2025 circular revising minimum capital requirements has put pension administrators on PE radars. The circular raises Pension Fund Administrators’ (PFAs) capital thresholds. Some PFAs will meet the new threshold through their shareholders’ funds, and those who do not are likely to embark on a capital raise, including through private placement and M&A, by the 30 June 2027 deadline. Recent transaction activities reflect this trend: Odu’a Investment Company acquired a 10% minority stake in FCMB Pensions in March 2026, while Premium Pension and Trustfund Pensions proposed a merger in July 2026. Also, the increase in investment limit of pension fund assets in PE funds under the Revised Regulation on Investment of Pension Fund Assets (September 2025) provides for additional patient local capital for investments in PE funds subject to regulatory investment limits and governance constraints under the Regulation.

• Energy: Energy remained one of the most active sectors for PE investments. Continued divestments by international oil companies, together with increasing indigenous ownership of upstream petroleum assets, have generated significant acquisition opportunities for strategic investors and private capital. These transactions created acquisition opportunities for local players seeking productive assets with predictable cash flows, proven reserves and opportunities for operational improvement. Investors continued to favour assets capable of generating stable long-term returns despite commodity price volatility.

Beyond the above sectors, PE interests extend to fintechs (notably acquisitions of licensed institutions to accelerate market entry), telecommunications and digital infrastructure, healthcare and consumer businesses, driven by demographic demand and resilient cash flows.

Impact of Geopolitical Developments and Macro-Economic Conditions in the Market

Macro-economic conditions significantly influence PE activity in Nigeria. The International Monetary Fund’s (IMF) 2026 Article IV Consultation projected GDP growth of 4.1%, while the World Bank reported improvements in Nigeria’s fiscal and external positions. Nevertheless, investors remained cautious in light of elevated financing costs, exchange-rate uncertainty and global economic uncertainty. Despite signs of easing inflation, PE investors have continued to adopt a disciplined and selective investment approach.

The CBN’s reduction of the Monetary Policy Rate from 27% to 26.5%, has done little to reduce the cost of naira-denominated acquisition financing. As a result, highly leveraged buyouts have remained relatively unattractive, prompting investors to structure transactions using alternative financing arrangements rather than relying on traditional acquisition debt.

Foreign exchange reforms, including the unification of the exchange-rate regime, have improved market transparency, enabling PE investors to undertake more reliable valuations, financial modelling, and transaction pricing. Separately, the introduction of the Nigerian Overnight Financing Rate (NOFR) as the benchmark reference rate is expected to support more consistent pricing of floating-rate instruments used in PE-linked financing structures.

Recent reforms have reshaped Nigeria’s PE landscape and are influencing investment decisions from fund formation through exit.

The Securities and Exchange Commission’s (SEC) January 2026 Circular and the March 2026 Guidelines on Revised Minimum Capital for Regulated Entities substantially increase the regulatory capital required to operate investment businesses in Nigeria. The minimum capital requirement for PE fund managers increased from NGN50 million to NGN500 million, while venture capital fund managers must now maintain NGN200 million, up from NGN 20million.

By the SEC’s October 2025 Interpretative Guidance Note on Private Equity Fund Rules, PE funds with a target size of NGN5 billion or less remain exempt from full registration but must submit their governing documents to the SEC and obtain a “No objection” response before fundraising. The SEC has also clarified in its April 2025 Directive on the Implementation of the Executive Order on the Ease of Doing Business that sponsors cannot avoid registration by establishing multiple sub-NGN5 billion vehicles forming part of a single fundraising programme.

The SEC has, via regulation, prescribed minimum thresholds for equity/proprietary contributions for access to pension fund assets. PE fund managers seeking pension fund investment must maintain a proprietary commitment of at least 3% of the fund size, reduced to 1% where a sovereign wealth fund or multilateral development finance institution participates. Although, similar to the general partner (GP) commitment commonly expected internationally, Nigeria has, rather than leaving it to investor negotiation, provided a statutory minimum.

The Revised PenCom Regulation on Investment of Pension Fund Assets and its February 2026 Addendum are also significant. Nigerian pension funds remain one of the country’s largest potential sources of long-term institutional capital, but access now depends on stricter eligibility requirements, including SEC registration, appropriate governance arrangements, audited financial statements, experienced investment personnel and compliance with PenCom’s operational standards. These requirements may hinder entry for first-time managers while favouring established sponsors with demonstrable governance and investment track records.

The Nigeria Tax Act 2025, which became effective from 1 January 2026, has equally significant implications for both transaction structuring and exit considerations. The Act expands the definition of chargeable assets to include shares, options, debts, digital assets and other incorporeal property, and introduces rules under which certain indirect transfers of Nigerian assets by non-resident investors may trigger Nigerian tax liabilities. Investors must therefore evaluate tax consequences at the acquisition and exit stages, with greater focus on holding structures, treaty protection, tax indemnities and purchase price adjustment mechanisms.

Although these reforms may impose additional costs on PE investors and sponsors, they also provide greater certainty and support the continued institutionalisation of Nigeria’s PE market.

Primary Regulators Governing PE Transactions

PE funds and transactions in Nigeria are governed by multiple regulators rather than a single specialist authority, depending on the target’s business, the deal structure and whether the counterparty is a regulated entity or a listed company. As a result, sponsors routinely engage with several regulators across the investment lifecycle, from fund formation and diligence to change-of-control approvals and exit.

The principal cross-sector regulators include:

• Corporate Affairs Commission (CAC): Administers company incorporation and corporate filings under the Companies and Allied Matters Act 2020 (“CAMA 2020”). PE transactions commonly require company registration and post-incorporation filings.
• Securities and Exchange Commission (SEC): Regulates qualifying PE funds and fund managers, collective investment schemes and public-market transactions. The SEC’s April 2025 Private Equity Fund Rules and October 2025 Interpretative Guidance Note have clarified registration thresholds, governance standards and ongoing compliance, making the SEC central to fund formation and public-market exits.

• Federal Competition and Consumer Protection Commission (FCCPC): Serves as Nigeria’s merger control authority. Transactions meeting notification thresholds or involving acquisitions of control (including some minority stakes that confer material influence) require FCCPC clearance.
• Nigerian Investment Promotion Commission (NIPC): Facilitates foreign investment in Nigeria and administers registration rules relevant to inbound investors.
• Nigerian Revenue Service (NRS) and the State Internal Revenue Services (SIRS): Administer the principal federal and state taxes relevant to acquisitions, restructurings and exits. Tax considerations routinely influence transaction structuring, acquisition financing, dividend repatriation and exit planning, making tax due diligence a core component of PE transactions.
• Nigerian Financial Intelligence Unit (NFIU): Domiciled within the CBN, its AML/CTF framework drives beneficial ownership checks, source-of-fund verification and KYC obligations throughout the deal lifecycle.
• Nigerian Exchange Limited (NGX) or FMDQ Securities Exchange: Relevant where a PE transaction involves a listed company or where a PE sponsor intends to exit through an IPO or listing by introduction.
• Nigeria Data Protection Commission (NDPC): Administers the Nigeria Data Protection Act 2023 (NDPA). Compliance has become an increasingly important due diligence issue, particularly for fintech, financial services, healthcare, telecommunications and technology businesses.

Also, sector regulators hold approval or no-objection rights over change-of-control and investment transactions, and these consents typically operate as conditions precedent in transaction documents. The principal regulators are:

• Central Bank of Nigeria (CBN): Regulates banks, fintechs and other financial institutions.
• National Insurance Commission (NAICOM): Regulates insurers.
• National Pension Commission (PenCom): Regulates pension fund administrators.
• Nigerian Communications Commission (NCC): Regulates telecom licensees.
• Nigerian Upstream Petroleum Regulatory Commission (NUPRC): Regulates upstream oil assets.
• Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA): Regulates midstream and downstream petroleum operations.

Transactions involving regulated businesses frequently require change-of-control approval and/or regulatory consents in addition to merger clearance.

Primary Regulators Governing M&A Transactions

The FCCPC is Nigeria’s merger control authority under the Federal Competition and Consumer Protection Act 2018 (FCCPA). It reviews mergers and business combinations to assess potential anti-competitive effects in the relevant market. For transactions involving public companies or changes in shareholding of capital-market operators, the SEC also has primary approval authority. For listed companies, a “No objection” letter from the relevant exchange is required after obtaining FCCPC and SEC approvals. In addition to merger control and capital-market approvals, transactions in regulated sectors may require separate change-of-control consents from sector regulators.

PE-Specific Considerations and Treatment of Equity-Backed Buyers

PE buyers fall under the same merger control rules as strategic acquirers. Nigerian law does not distinguish financial sponsors from trade buyers, nor does it offer a separate filing route or exemption for PE funds. PE sponsors must secure the required licence, and failure to secure the required approvals before implementation can amount to gun jumping and attract regulatory sanctions.

Foreign Investment and National Security

Unlike in some other jurisdictions, Nigeria does not operate a standalone national-security screening regime. Foreign investment, like local investment, is regulated through a decentralised framework of sector-specific statutes and regulators. The NIPC Act generally permits foreign ownership except where the statutory Negative List or local-content rules restrict it. Local-content requirements, administered by the Nigerian Content Development and Monitoring Board, can affect ownership, contracting and procurement in petroleum transactions. Consequently, regulatory scrutiny in Nigeria is typically target-centric rather than investor-centric.

The Relevance of the EU FSR Regime for Transactions in Nigeria

The EU Foreign Subsidies Regulation (Regulation (EU) 2022/2560) (“EU FSR”) does not ordinarily apply to purely domestic Nigerian deals. It may be relevant where a Nigerian target has substantial EU activity or the transaction meets the EU FSR’s nexus and notification thresholds. Investors pursuing cross-border acquisitions involving EU businesses should assess the EU FSR early to avoid timing and execution surprises.

Changes in Law or Practice in the Approach to Anti-Bribery, Sanctions and ESG Compliance in the Past 12 Months

Although Nigeria has not introduced major new anti-bribery or sanctions laws in the period under review, enforcement activity has intensified. Financial-crime and anti-corruption agencies have remained active in their investigations. As a result, investors and portfolio managers face greater scrutiny on anti-money-laundering controls, beneficial-ownership transparency, whistle-blowing procedures and sanctions screening, all of which are core items in transaction due diligence and post-acquisition remediation plans.

On ESG, while Nigeria has not enacted comprehensive, economy-wide ESG legislation, the Financial Reporting Council of Nigeria is advancing phased adoption of the IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2). As a result, ESG compliance and sustainability reporting are increasingly material to due diligence, investment monitoring and exit planning. PE investors should assess climate and social risks, reporting readiness and remediation plans alongside financial and regulatory considerations.

The scope of legal due diligence in Nigerian PE transactions depends on the size and complexity of the investment, the target’s regulatory profile, the transaction structure and the level of control being acquired. Although the scope is broadly comparable to that in strategic M&A transactions, PE investors typically place greater emphasis on legal, regulatory and compliance risks that may affect valuation, financing, post-acquisition value creation or exit.

Due diligence scope tends to vary with the nature and extent of the interest being acquired. A buyer acquiring a controlling interest will ordinarily commission a comprehensive legal due diligence covering all material aspects of the target’s business, while minority investments, growth capital transactions and venture capital transactions are more likely to be limited to red-flag reviews focusing on material legal risks. Although in regulated sectors, even minority investors commonly extend due diligence to licensing, regulatory compliance and retail exposures.

Legal due diligence is typically conducted electronically through a virtual data room, supplemented by management presentations, written question-and-answer processes, and interviews with senior management and key operational personnel. Depending on the nature of the business, counsel may also undertake site visits and review operational assets. Nigerian counsel usually leads the review of local laws, working alongside international counsel on cross-border financing and tax matters. The findings are usually presented either as a comprehensive due diligence report or as a red-flag report (depending on the scope) identifying material legal risks, recommended mitigants, and issues requiring contractual protection or further negotiations.

Core areas of focus in Nigerian PE legal due diligence include:

• Corporate information: Confirm incorporation, constitutional documents, share capital history, shareholder agreements, beneficial ownership and statutory filings. Check transfer restrictions, pre-emption rights and past corporate actions for restrictions that could impede a sale.
• Regulatory compliance: Verify licences, permits and ongoing compliance; identify required notifications, change-of-control consents, and potential enforcement matters that could delay or hinder completion.
• Material contracts: Review any/all material customer, supplier, JV, concession and outsourcing agreements for change-of-control clauses, unsettled liabilities, consent mechanics, assignment limits and termination triggers. Focus on contracts that drive revenue or critical operations.
• Employment: Examine executive contracts, management equity plans, pension obligations, and employment disputes that could disrupt integration or create contingent liabilities.
• Financing and security: Map existing debt, guarantees, security packages and registered charges; confirm covenant positions and events of default that might restrict transfers or accelerate debt on completion.
• Disputes and contingent liabilities: Assess litigation, arbitration and regulatory investigations for likely exposure.
• Tax: Review tax compliance and transfer pricing issues.
• Data protection: Test compliance with the NDPA, cross-border data flows and cybersecurity governance, especially for fintech, healthcare and technology targets.
• Environmental, social and governance (ESG): Where material, assess environmental compliance, health and safety, and ESG reporting readiness; identify remediation needs that affect valuation or exit timing.

In domestic bilateral transactions, sellers typically limit pre-sale due diligence to populating the data room, and regularising corporate records and regulatory filings. By contrast, vendor due diligence is more common in competitive auction processes and cross-border transactions involving multinational strategic buyers. In these transactions, sell-side legal advisers are often engaged early to identify and remediate legal issues, streamline the diligence process, improve execution certainty, and minimise disruption to the target’s business.

The vendor due diligence report is typically prepared for information purposes only, with prospective buyers being expected to undertake their own independent legal due diligence. Where reliance is given, typically in auction processes, it is usually extended on negotiated terms, subject to liability caps and confined to the final report addressed to the successful bidder.

Most PE acquisitions in Nigeria proceed by private treaty, through a share purchase agreement or share subscription agreement, or, where liabilities or regulatory restrictions make a share deal unattractive, an asset acquisition. Statutory mergers and schemes of arrangement, which are effected under CAMA 2020 and subject to FCCPC approval (for mergers), are required less frequently and obtained mainly in larger or public-company transactions. However, asset acquisitions are used where liabilities or regulatory restrictions make share deals unattractive. Court-approved schemes of arrangement and tender offers under the Investments and Securities Act 2025 (“ISA 2025”) are typical in public-company transactions but rare in PE.

Negotiated Sales Vs Auction Process in Nigeria

In Nigeria, privately negotiated deals are more common as buyers have broader scope to negotiate detailed representations and warranties, bespoke indemnities, higher liability caps, bespoke exclusivity terms and extensive conditions precedent informed by due diligence. Meanwhile, auction sales, being seller-driven, offer narrower warranties, limit indemnities and liability, and press for fewer conditions, shorter timetables and greater deal certainty.

A PE-backed buyer is usually structured through one or more special purpose vehicles (SPVs) rather than through the fund directly. The structure may include an offshore holding vehicle, a Nigerian acquisition vehicle and, where leverage is used, a debt incurrence vehicle. Tax, exchange control, regulatory approval, ring-fencing, financing and exit planning drive the structure.

The SPV is usually the named purchaser under the acquisition document. The fund normally remains behind the acquisition vehicle and does not assume broad operating obligations. However, sellers and lenders may require comfort through an equity commitment letter, limited guarantee, sponsor support undertaking, parent guarantee, or proof of available funds.

Where the target is regulated, the regulator may examine the ultimate investor structure, controllers, source of funds, and beneficial ownership. Therefore, even if the fund is not the direct contracting party, its GP, controllers and material investors may be relevant to approval. On exit, the selling party is usually the SPV, but the GP will still drive negotiation, disclosure and approvals.

PE acquisitions in Nigeria are typically financed through a combination of sponsor equity and third-party debt, although the funding mix varies per transaction and the prevailing market conditions. Consistent with established Nigerian market practice, growth capital and minority investments are predominantly equity-funded, with capital sourced from committed fund capital drawn down through capital calls. PE funds active in Nigeria are financed principally by both domestic and international limited partners (LPs).

Unlike more mature leveraged buyout markets, debt-heavy leveraged buyouts remain relatively uncommon in Nigeria owing to comparatively high domestic borrowing costs, conservative bank lending practices and the limited availability of dedicated acquisition finance.

Equity commitment letters are not required under Nigerian law and remain a matter of commercial practice. They are, however, seen in auction processes and cross-border transactions where contractual certainty of funds is a negotiated seller protection. In domestic bilateral transactions, sellers more commonly rely on the investor’s reputation, evidence of committed capital and contractual protections in the acquisition documents.

Consortium deals involving several sponsors jointly acquiring an investment are fairly common, particularly in larger or regulated sector transactions. Co-investment alongside a lead fund is also common. It takes two forms: passive co-investments by LPs already invested in the fund, who commit additional capital directly to a particular deal, and participation by external co-investors brought in at the transaction level. LP co-investment is the most common, as it builds on existing relationships and now has regulatory footing for pension assets. The Revised Regulation on Investment of Pension Fund Assets allows a PFA to set up a special purpose co-investment vehicle with a PE fund manager in which pension assets have already been invested.

Consortia pairing a PE fund with a corporate or strategic investor are also well established, particularly in regulated-sector capital raises. Depending on the deal, the corporate may join as a co-purchaser in the consortium or as a co-investor along the deal fund.

Consideration in Nigerian PE transactions is predominantly cash, paid at completion or on a deferred basis under payment schedules. The price is usually fixed, with or without a locked box, and determined by reference to a historical value that is not adjusted at completion.

Where a locked-box mechanism is used, economic benefit passes to the buyer at the box date. However, practice varies. It is not uncommon for buyers to require that proceeds generated by the target before completion be held by an escrow agent or in an interest-yielding account pending completion. In some cases, the economic value still sits with the seller until completion, particularly when a substantial part of the consideration is still outstanding. A common feature across these structures is the inclusion of pre-completion covenants restricting extraction of value before completion, sometimes supported by a leakage repayment clause and a leakage account to restore value erosion.

Completion accounts determine value by reference to accounts drawn up at completion. They are less common, as they delay certainty and invite disputes, hence the preference for a fixed-price locked box.

Earn-outs and deferred consideration are relatively uncommon outside founder-owned deals, while rollover structures are frequently used to incentivise management.

A PE buyer will typically seek stronger contractual protections compared to a corporate investor, such as detailed warranties, indemnities, price adjustment mechanisms, leakage protection and interim operating covenants, reflecting the fund’s finite holding period and its need to preserve value for a future exit. A PE seller, by contrast, favours certainty and a clean break so that proceeds can be distributed to investors within the fund’s life. Corporate parties, without the same fund-life pressure, are generally more willing to accept completion accounts and to give or accept more extensive post-completion obligations.

Where fixed-price locked box structures are used, interest on the equity price between the box date and completion date is a matter of negotiation, rather than market practice. Buyers are not usually agreeable to an equity ticker, particularly where the completion period is short or where the seller still has pre-completion obligations to fulfil, such as obtaining regulatory licences.

Similarly, reverse interest is not common in the Nigerian PE market, but still subject to negotiations. Generally, leakages are clawed back without any interest being charged on them, and sometimes both parties will net off payable leakages against outstanding consideration.

The choice of dedicated dispute resolution mechanism is contingent on the consideration structures, particularly where the price or other metrics are made subject to further negotiations by the parties. The transaction documents will typically provide for any consideration dispute to be referred to an independent expert, usually appointed by the parties or a professional body. The expert determination is not arbitration but a binding determination declared to be final. Litigation rarely features at this stage, unless the parties fail to include a dispute- resolution mechanism for price determination, or where a party disputes the expert’s assessment and wishes the court to review it.

Completion accounts are most commonly associated with expert determination, typically by an independent accounting firm or financial expert to determine the disputed price. By contrast, locked-box disputes are less likely to require accounting expert determination because the purchase price is fixed by reference to the historical statement, save for disputes over leakage accrual or calculation, or over whether the seller has complied with its contractual undertaking.

Earn-outs require particular care as disputes may involve both accounting and conduct issues. The accounting component may be referred to an expert, while disputes concerning contractual interpretation, allegations of bad faith, compliance with operational covenants or the achievement of non-financial milestones are ordinarily reserved for arbitration or litigation, as they involve legal rather than technical accounting questions.

The level of conditionality in Nigerian PE transactions is mostly driven by the regulatory profile of the target, the complexity of the transaction, and the allocation of execution risk negotiated by the parties. Deals typically carry both mandatory regulatory conditions and negotiated commercial conditions. Mandatory conditions arise by operation of law where the transaction triggers them, for example, the requirement for CBN approval for the acquisition of significant holdings in banks, FCCPC merger clearance, and sector no-objections clearance such as those of NAICOM and the NUPRC.

Beyond these, PE transactions in Nigeria usually contain a meaningful set of commercial conditions precedent material to the investment. These commonly include board and shareholder approvals, third-party consents, waiver of pre-emption rights and rights of first refusal, lender consent, release or restructuring of security, tax regularisation, updated corporate filings, completion of restructuring steps, and no material warranty breach before completion.

Financing conditions are less common in seller-friendly or competitive processes because sellers expect PE bidders to show certainty of funds, although they may appear in large or debt-heavy transactions.

Material adverse effect (MAE) clauses are also commonly used but negotiated tightly. Buyers seek broad MAE language capturing any material deterioration in the target’s business, financial condition or ability to complete, while sellers press for narrower definitions tied to the target’s own licences and assets, and resist walk-away rights for general Nigerian macro-economic volatility, currency depreciation, or sector-wide change, arguing that these are systemic rather than target-specific.

“Hell or high water” undertakings are relatively uncommon in Nigerian PE transactions; buyers typically prefer “reasonable best efforts” or similar covenants, allocating regulatory risk instead through conditions precedent and co-operation obligations, rather than assuming open-ended responsibility for obtaining clearance.

Although buyers are generally more willing to accept robust obligations to pursue FCCPC approval because the merger control framework is relatively well established, they are less likely to assume unlimited regulatory risk. Whether a buyer must accept divestiture remedies, behavioural commitments or other material conditions remains a matter for commercial negotiation and depends on the strategic importance of the transaction and the likely impact of any proposed remedy.

Nigeria does not operate a dedicated screening regime comparable to jurisdictions like the USA or the UK. Foreign investment is instead facilitated through registration with the NIPC, which permits up to 100% foreign ownership in most sectors, while the National Office for Technology Acquisition and Promotion registers technology transfer agreements for the purpose of fee and royalty remittance. Neither operates as a screen to block or unwind transactions. Negotiations, therefore, focus on the specific sectoral and merger control approvals rather than distinguishing foreign investment conditions from merger control as would arise under a dedicated scheme of regime.

The EU FSR may matter where the sponsor group is involved in an EU transaction meeting the relevant thresholds. Where relevant, the acquisition agreement may include regulatory co-operation covenants, but Nigerian completion is not usually made conditional on EU FSR clearance unless the facts require it.

Seller break fees are not standard practice in Nigeria; however, where they appear, they are based on negotiation rather than market convention. A break fee is typically payable by the seller to the buyer to compensate the buyer for costs incurred in a transaction the seller elects not to pursue.

A reverse break fee is the more relevant form in a PE context, where the buyer compensates the seller if the buyer chooses to walk away from the transaction. Where a reverse break fee is agreed, it is usually tied to triggers such as the buyer’s failure to obtain financing, completion failure after all conditions have been satisfied, or a material breach of the transaction documents. PE-backed buyers typically resist agreeing to unconditional reverse break fees.

Under Nigerian law, there is no specific statutory cap or express legal limit on break fees; however, the fee must represent a genuine pre-estimate of loss or a proportionate protection of a legitimate interest, and not a penalty. Where a fee is agreed, quantum tends to track the international benchmark single-digit percentage of equity value (typically 1–3%).

Termination rights are usually negotiated in the acquisition agreement. Common triggers include failure to satisfy conditions precedent by the longstop date, refusal or withdrawal of a mandatory regulatory approval, material breach of warranties, breach of interim covenants, completion failure after conditions have been satisfied, insolvency of a party, illegality, court or regulatory prohibition, and failure to obtain required shareholder or third-party approvals.

For PE buyers, financing failure is generally not accepted as a standalone termination right unless expressly negotiated, reflecting market expectations that sponsors have committed funding available at signing. Buyers may seek termination rights where a required regulatory approval is refused or granted subject to conditions that materially undermine the commercial rationale of the transaction, or where the acquisition agreement contains a negotiated MAE provision.

The longstop date, being the date by which completion must occur, failing which either party may terminate, is negotiated according to the nature and complexity of the transaction. For private acquisitions requiring limited regulatory approvals, a period of three to six months from signing is typical. For cross-border transactions or acquisitions in regulated sectors requiring multiple approvals, including banking, telecommunications, electricity, and oil and gas, six to 12 months may be more appropriate. Parties frequently provide for the longstop date to be extended by mutual agreement where regulatory approval processes are ongoing and completion remains reasonably achievable.

The overall allocation of risk differs according to whether a party is financial or strategic. A PE sponsor or fund manager, constrained by the fund’s finite life and its duty to investors, negotiates for certainty and a clean entry or exit, while a corporate party with intentions of integrating the business allocates risk according to strategic and operational logic. Allocation is ultimately a matter of contract, influenced by bargaining power and due diligence.

In practice, PE sellers generally seek narrower warranties, limited indemnities, shorter limitation periods and lower liability caps, relying instead on due diligence and disclosure. A PE buyer places greater emphasis on protecting investment value through comprehensive warranties, specific indemnities, interim operating covenants and, where appropriate, completion-account adjustments, leakage protections and escrow arrangements.

Corporate parties behave differently. A corporate seller, having been involved in the management of the business and its operations, may give broader operational warranties, although it will still limit liability in a strategic disposal or carve-out. A corporate buyer, by contrast, with sector knowledge, potential synergies and a longer holding horizon, is often willing to accept risks that a financial buyer would insist on covering.

In Nigeria, regulatory and macro-economic risks are particularly negotiated. PE parties, answerable to international investors, tend to negotiate regulatory-approval and FX/repatriation risk more firmly, whereas a domestic corporate may be more comfortable absorbing macro and regulatory risks as a matter of course.

On exit, a PE seller typically gives fundamental warranties, such as title to shares, capacity, authority, no encumbrances and due execution, and resists business and operational warranties, as it has no day-to-day involvement and seeks a clean exit. A PE seller likewise avoids a general tax indemnity, addressing tax through specific indemnities or warranty and indemnity (W&I) insurance. The operational warranties are typically given by the management team, who possess the requisite business knowledge, subject to strict caps.

Where the buyer is also PE-backed, the gap between the seller’s clean-break position and the buyer’s demand for protection is often bridged by W&I insurance.

Liability limitations follow international practice as to quantum (caps, de minimis and thresholds), time (survival periods, with tax tied to the statutory limitation period) and known issues (matters disclosed or within the buyer’s knowledge are excluded). Data-room disclosure is generally permitted if matters are fairly disclosed, although buyers often resist deemed disclosure of the entire data room.

Acquisition documentation involving PE parties commonly includes pre-completion and non-leakage covenants, restrictions on conduct outside the ordinary course, exclusivity and confidentiality undertakings, regulatory co-operation covenants, non-compete and non-solicit provisions, completion deliverables and post-completion transitional assistance. Where the buyer is PE-backed, sellers commonly seek assurance of the buyer’s ability to fund given that the contracting buyer is usually an SPV.

W&I insurance is available for Nigerian risks but is not yet common, particularly in the mid-market. It features more often in larger cross-border deals, competitive auctions, infrastructure transactions, and exits where a PE seller needs a clean break. However, cost, underwriting appetite, disclosure quality and jurisdictional risk still limit wider use. Where used, it typically covers fundamental and business warranties, with tax risks addressed through the policy or a specific indemnity.

Escrow and retention arrangements are more common. However, PE sellers may resist broad escrows because they delay fund distributions, so buyers rely on targeted escrows, usually securing specific indemnities or identified tax exposures rather than the general warranties, together with price adjustments.

Litigation arising directly from PE transactions is relatively uncommon in Nigeria because most disputes are channelled into arbitration or expert determination. Acquisition agreements commonly provide for tiered dispute resolution mechanisms requiring good-faith negotiations, followed by mediation or expert determination (particularly for accounting matters), with arbitration as the principal dispute resolution forum. This reflects parties’ preference for preserving commercial relationships and avoiding protracted court proceedings.

The provisions most likely to generate disputes are earn-out provisions, which are particularly susceptible to dispute because they depend on post-completion performance and may be influenced by the buyer’s operation of the target business following completion. Consideration mechanics and W&I claims also arise, although consideration disputes are typically resolved by expert determination and the remainder by arbitration.

Private investment in public equity is fairly common in Nigeria in the light of the recent recapitalisation wave through which private capital has entered listed banks and insurers by way of private placements and negotiated stake acquisitions. However, full public-to-private conversion, by which a PE bidder acquires a listed company and makes it private, is quite rare in Nigeria.

If full public-to-private conversion were to occur, it would be effected by a scheme of arrangement or a takeover offer under the ISA 2025, subject to SEC approval, sector regulatory approval and the approval of the target company’s board. The target company’s board plays a pivotal role as it must consider the offer, manage any conflict of interest, comply with disclosure obligations and advise shareholders on the merits of the offer.

Under CAMA 2020, a shareholder holding 5% or more of the shares or voting rights of a company, pursuant to Section 119 (for private companies) or 120 (for public companies), is regarded as a person with significant control and must notify the company and CAC within 14 days of such holding.

For PE-backed bidders, disclosures often extend to the aggregation of holdings held by the acquisition vehicle or sponsor, co-investors, nominees, and affiliates or related parties; identification of ultimate beneficial owners; disclosure of financing and source of funds; and disclosure of management equity, rollover, side arrangements or special benefits that may affect equal treatment of shareholders.

Nigeria has a mandatory takeover offer regime; however, this is for public companies under the ISA 2025. Where a person, acting alone or in concert with others, acquires 30% or more of the total shares/voting rights of a public company, such person(s) must make an offer to the remaining shareholders in accordance with the ISA 2025 and the SEC Rules and Regulations.

In Nigeria, there is no prescribed statutory minimum offer price comparable to the “highest price paid” rules found in some jurisdictions. However, for transactions involving public companies, offer prices may not be the product of bilateral negotiations, as in private sale, as they are usually set by the bidder by reference to the prevailing market price of the shares, typically at a premium to encourage acceptance. Moreso, in a mandatory takeover offer, the price is subject to a minimum price principle, which should reflect the highest price paid to shareholders of the same class. The offer and pricing are subject to SEC oversight and the applicable disclosure and shareholder protection requirements.

PE-backed takeover offers in Nigeria are commonly subject to conditions relating to regulatory approvals and implementation. Under the ISA 2025 and SEC Rules and Regulations, where the target is a public company, these conditions must be clearly disclosed, objective, and consistent with the principles of transparency, fairness and equal treatment of shareholders.

A takeover offer is not ordinarily conditional on the bidder obtaining acquisition financing. The bidder is required to demonstrate sufficient financial resources, including evidence of the source of funds, as part of the conditions precedent for the takeover of private companies and the SEC approval process for the takeover of public companies.

Deal protection measures are a matter of contract, subject to directors’ fiduciary duties and applicable regulatory oversight. A bidder may seek protection from shareholders, in the form of irrevocable undertakings to accept the offer, and from the target, in the form of exclusivity, non-solicitation, and notification or matching rights. Measures that would fetter the board’s ability to respond to a superior proposal (force the vote) or that are inconsistent with directors’ duties or shareholder interests are rarely accepted.

Where a PE bidder does not acquire 100% of the target following a successful takeover offer, the governance rights it can seek outside of its shareholdings vary from transaction to transaction and are subject to the target’s constitutional documents, shareholders’ agreement and applicable regulations. It is usual practice for a controlling bidder to seek the right to appoint or remove directors, nominate the chairperson or key management, influence board committee composition and negotiate reserved matters or veto rights over significant corporate actions.

Nigerian law does not prescribe a specific ownership threshold that enables a PE bidder to implement a debt push-down following a successful acquisition. Rather, post-acquisition debt push-down may be achieved through corporate restructuring mechanisms, such as refinancing, intra-group reorganisations or mergers, and must comply with CAMA 2020, including its rules on financial assistance, capital maintenance and directors’ duties.

Under Section 712 of CAMA 2020, a bidder that acquires or contracts to acquire at least 90% in value of the shares in a private company may compulsorily squeeze out the remaining shares on the same terms, although, under Section 713, the dissenting shareholders have corresponding sell-out rights. Dissenting shareholders retain the right to apply to court to either challenge the entire acquisition or vary the terms.

Irrevocable commitments to tender or vote from principal shareholders are not a standard feature of Nigerian PE transactions, although they may be sought in negotiated transactions involving significant or controlling shareholders to enhance deal certainty. Such undertakings are typically negotiated before announcement and before the offer document is finalised, so that the bidder secures such commitments.

Whether the shareholders have an “out” depends on the form of undertaking. A “hard” irrevocable undertaking binds the shareholder to the original offer even if a higher competing bid emerges, whereas a “soft” irrevocable undertaking releases the shareholder where a competing offer exceeds the original by a defined margin. A hard undertaking is usually avoided as principal shareholders tend to want to preserve their ability to accept a better offer.

Management equity incentivisation is increasingly common in Nigerian PE transactions, particularly in growth equity and founder-led investments, although it is not a universal feature. PE sponsors commonly use ordinary shares, share options or other equity-linked incentive arrangements to align the interests of key management with the sponsor’s value creation and exit strategy.

While there is no rigid market norm, the management equity pool typically falls within a range of around 5% to 15%, with the largest allocations to founder-CEOs and key executives. The precise level is negotiated per transaction, depending on the company’s ownership structure, management’s role and contribution, and the sponsor’s commercial objectives.

Management participation in Nigerian PE transactions is commonly structured through sweet equity, which is ordinary shares acquired by management at nominal or low cost, alongside the PE sponsor’s institutional strip comprising a small ordinary shareholding and a larger tranche of preference shares. Because the sponsor takes most of its returns through preference shares, ordinary shares take a disproportionate share of the upside on a successful exit but are more exposed to any downside, sometimes receiving nothing where the exit proceeds do not meet the preferred stack. This asymmetry aligns management with value creation. Preferred instruments typically take the form of preference shares, or shareholder loans and loan notes. Shareholder loans offer interest deductibility and greater flexibility for the repatriation of returns.

Management equity is commonly subject to vesting and leaver provisions. Vesting is transaction-specific, although a four-year vesting schedule with a one-year cliff is common practice.

Leaver provisions determine what happens to a departing manager’s shares and, critically, the price at which they are repurchased. A “good leaver” (typically one leaving through death, disability, retirement, redundancy, termination without cause or other circumstances approved by the board) generally realises fair value for vested shares. A “bad leaver” (typically one dismissed for misconduct or who commits fraud) generally forfeits or is compelled to sell their shares, including vested shares, at the lower of cost and fair value, thereby forfeiting the accrued upside.

Management shareholders in Nigerian PE transactions customarily assent to the following restrictive covenants: confidentiality; undertakings; non-compete obligations; non-solicitation of customers, suppliers and employees; non-dealing or non-circumvention obligations; non-disparagement undertakings; IP assignment obligations; and obligations to return company property and information upon exit.

Under Nigerian law, unduly restrictive covenants are treated as restraints of trade and are enforceable only where they are reasonable, protect a legitimate business interest and are not contrary to public policy. These covenants are typically found in both the equity documentation (shareholders’ or investment agreement) and the employment or service contract. Covenants given by a manager in the capacity of shareholder are generally more readily enforced than equivalent restraints in an employment contract, which courts scrutinise more strictly.

In terms of enforcement of restrictive covenants, for shareholder contracts, courts will consider their duration, the nature of the restricted business, and the public interest, among other things. For employment contracts, the FCCPA states that employment or service contracts may lawfully restrict an individual (but not a company) from engaging in competing work during or after the contract ends, provided the restriction lasts no more than two years.

Minority protections for manager shareholders derive from the statutory protections available to minority shareholders under CAMA 2020, supplemented by contractual protections in the shareholders’ or investment agreement including tag-along rights, leaver protections, information rights, limits on drag-along rights, and consent rights over matters directly affecting management, such as changes to the incentive plan or the rights attaching to management shares.

Vetoes are uncommon because a minority manager shareholder does not typically enjoy veto rights over general business or holding-structure matters, or a right to control or influence the exit of a PE fund. Management does not typically obtain anti-dilution protection, which is generally an investor protection.

A Nigerian PE fund investor may exercise contracted levels of control through negotiated governance rights contained in transaction documents, such as shareholders’ agreements, as opposed to day-to-day management. The scope of those rights depends on the fund’s equity interest, the commercial leverage of the parties, and whether the target operates in a regulated sector.

• Board appointment rights: A PE investor acquiring a controlling stake will ordinarily negotiate the right to appoint a majority of the board (or at least a number proportionate to its investment), nominate the chairperson and control board committees. Where a minority, a PE fund may sometimes get a board observer right.
• Reserved matters: Reserved matters (commonly deployed as a control mechanism by minority investors) cover both corporate control matters and business/operational matters. This gives the PE fund negative control over key decisions such as share issuances, borrowings above agreed thresholds, material acquisitions or disposals, related-party transactions, senior management changes, dividends, liquidation, recapitalisation and exit transactions. Minority investors typically negotiate a more extensive list of reserved matters, precisely because they lack board control.
• Information rights: PE funds also negotiate comprehensive information rights to enable effective oversight of the investment and compliance with their reporting obligations to LPs. These rights typically include access to monthly or quarterly management accounts, board papers, annual budgets and business plans, audited financial statements, key performance indicator reports, compliance and regulatory reports, inspection and access rights, and, where relevant, ESG or impact reporting.

As a general rule, under Section 42 of CAMA 2020, a company is a separate legal entity from its shareholder. Accordingly, a PE fund backing the majority shareholder is not ordinarily liable for the acts or omissions of its portfolio company because each portfolio company is recognised as a separate legal personality. Therefore, the exercise of customary governance rights, including board appointment rights, does not, without more, expose the PE fund to liability for the obligations of its portfolio company.

However, liabilities may arise, by statute or at common law, in several circumstances, including where:

• the PE fund directly participates in fraud, misrepresentation or other wrongdoing;
• the portfolio company is used as a sham façade to commit fraud or to evade legal obligations;
• the PE fund or its representatives act as shadow or de facto directors within the meaning of Section 270 of CAMA 2020; or
• the PE fund knowingly participates in fraudulent trading, misfeasance or other conduct attracting liability under applicable insolvency legislation, according to Section 672 of CAMA 2020.

Other circumstances include where the PE fund provides a direct contractual undertaking, such as a guarantee, indemnity, equity commitment letter or sponsor support undertaking with respect to a facility.

Beyond private sales to financial or strategic buyers and IPOs, the predominant exit route in Nigeria remains the privately negotiated trade sale, including secondary sales to other PE sponsors. Other forms of capital market exits are becoming notable, including listing by introduction, as illustrated by African Capital Alliance’s September 2025 realisation of its stake in Aradel Holdings following the company’s listing on the NGX.

Full dual-track processes are uncommon; some sponsors preserve optionality by preparing both a private and a capital-markets route, but most exists still close through a private, sponsor or secondary sale. Dual-track planning is, however, becoming more relevant as portfolio companies mature towards capital-market readiness.

Triple-track exit processes are not common in Nigeria. A triple-track process involves a PE seller simultaneously exploring: (i) a private sale; (ii) an IPO/listing or public-market exit; and (iii) a recapitalisation or refinancing solution. This is cumbersome, costly, and usually only makes sense for larger, regulated or capital-intensive businesses. What Nigeria is seeing is not a widespread triple-track PE exit market but rather select transactions where liquidity and capital formation overlap.

Institutional PE sellers in Nigeria usually prefer a cash exit rather than a rollover, because they are typically seeking liquidity for their fund and distributions to LPs. Rollover or reinvestment is more common for founders, management teams or strategic shareholders, or where a seller is making only a partial exit.

Drag-along rights and tag-along rights are typical in Nigerian PE arrangements, contained in shareholders’ or investment agreements and sometimes the company’s articles. In practice, the drag is more often a structural backstop than a frequently exercised power. It secures the sponsor’s ability to deliver 100% of the company on exit, but as most exits are consensual, it is rarely formally invoked.

There are no fixed statutory thresholds for drag and tag rights in Nigeria; thresholds are negotiated transaction by transaction. However, drag rights are commonly triggered by the approval of shareholders holding more than 50% of the shares, or by the approval of a defined investor majority, and tag rights by a proposed sale resulting in a change of control or involving a substantial shareholding.

This position differs by shareholder type. Institutional sponsors typically hold the drag, ensuring they can deliver full control on exit, and negotiate limits on any drag exercisable against them, while management shareholders are more commonly subject to drag with narrower tag rights, and their equity may carry vesting provisions, leaver provisions, restrictive covenants, and rollover requirements where the buyer wants continuity.

On an IPO exit, the applicable lock-up depends on the seller’s status and the offering structure. For example, in NGX Rulebook 2015, Rule 1.1 fixes a 12-month post-listing lock-up under which promoters and directors must retain at least half their shareholding; where the PE seller is treated as a promoter, core investor or director-linked shareholder, it may be required or expected to retain part of its holding for a similar period, and even where the rule does not strictly apply, underwriters or regulators may still require a contractual lock-up or orderly sell-down.

Relationship agreements are not mandatory or uniformly used in Nigeria in the same way as in some more developed IPO markets. However, where the PE seller retains a material shareholding or continuing governance rights after listing, the issuer and PE seller may enter an amended shareholders’ or investment agreement regulating post-IPO matters.

Several features are particular to PE-led IPOs. A sponsor rarely achieves a full exit at listing, and may opt to sell a tranche and the balance over time. Where the aim is to create a market to sell into rather than to raise capital, a listing by introduction may be preferred to a conventional IPO.