View source for Deal contingent forward

''Foreign exchange risk management''.

A deal contingent forward is a specialised forward foreign exchange (FX) contract.

The hedging customer is only obliged to fulfil the contract if a planned major transaction, such as an acquisition, occurs.


:<span style="color:#4B0082">'''''Reverse complexity'''''</span>

:"There is quite often a risk around the FX of these transactions, which comes from the fact that we are raising equity in sterling to make a euro transaction acquisition.

:Obviously, if the relative value of sterling and the euro changes between the point that you commit to raise the sterling and spend the euros, there is a risk associated.

:That involved us putting in place a deal contingent forward.

:This is basically a forward contract where the banks agree with you that if the transaction does not occur, then it expires worthless, but if the transaction goes through, then you get a specific FX rate."

:''Adam Richford FCA FCT, Group Treasurer, Renewi, The Treasurer, August 2018, p18.''


== See also ==
* [[Acquisition]]
* [[Contingency]]
* [[Contingent]]
* [[Equity]]
* [[Foreign exchange forward contract]]
* [[Foreign exchange risk]]
* [[Forward contract]]
* [[Hedging]]
* [[Transaction]]

[[Category:Manage_risks]]