Intro to M&A Representations and Warranties

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The primary transaction agreement in every M&A deal contains representations and warranties, colloquially referred to as “reps and warranties” or simply “reps,” from each party to the other. These are statements of past, present and sometimes future fact relating to the status, business, assets, liabilities, properties, condition, operating results, operations and prospects of the party making…

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How to take control of a Board through written consents

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Last month, the Delaware Court of Chancery issued an opinion in Kerbawy v. McDonnell that addressed how holders of a majority of a company’s shares should take control of a board of directors by executing written consents. The case involved interpretation of Section 228 of the Delaware General Corporation Law, which provides that, unless otherwise set forth in a corporation’s certificate…

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Anatomy of an Asset Purchase Agreement

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Like the classic game Operation,® asset purchase transactions require parties to take great care in extracting just what they want. However, successful asset sales require quite a bit more than a pair of tweezers and steady hands. Among other things, they require a well-crafted Asset Purchase Agreement (APA). These agreements, at their most basic level, provide for the sale…

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Dole CEO and GC Fraud Liability for Otherwise Proper Going-Private Deal

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Yesterday, the Delaware Court of Chancery found the controlling shareholder-CEO and General Counsel of Dole Food Co. Inc. liable to investors for $148 million for fraudulently driving down the company’s share price in anticipation of a going-private transaction.  What’s particularly noteworthy here is that the controlling shareholder appears to have structured the transaction with all of…

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Anatomy of a Stock Purchase Agreement

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Most private M&A transactions are structured as acquisitions of stock, rather than mergers or asset purchases. The principal agreement governing such a transaction is typically a Stock Purchase Agreement (SPA), sometimes styled a Securities Purchase Agreement or simply a Purchase Agreement. At their most basic level, these agreements provide for the sale of shares in a…

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What does an M&A lawyer do?

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An M&A lawyer runs the deal.  She is the hub in the hub-and-spoke system of deal parties and their advisers. The M&A lawyer serves as the primary point of contact for the rest of the deal team and has principal responsibility for shepherding the transaction to closing. She may be an in-house attorney but is more often an M&A specialist practicing with an outside…

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FTC Issues Guidance on Antitrust Merger Review

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As mentioned in a prior post, if the transaction value for an M&A deal equals or exceeds $76.3 million (as of the date of this post; the threshold is adjusted annually), an HSR filing may be required with the Premerger Notification Office of the Federal Trade Commission, and the parties must wait 30 days to…

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I’m buying a company. How do I know exactly what I’m getting?

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Unfortunately, an acquisition is like a box of chocolates: you never know what you’re gonna get. Even if it’s an asset purchase, rather than a merger or stock sale, when you’re buying a company, there’s risk that you’ll be assuming unknown liabilities. For example, unbeknownst to you, a seller may be insolvent, and the transfer of assets to you…

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What you need to know about M&A confidentiality agreements

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Most M&A transactions are material to the parties involved, and public disclosure that a deal is in the offing can have profound effects on a company’s operations, ranging from employee attrition to loss of confidence by commercial counterparties. Of course, for public companies, exploration of strategic alternatives may constitute material nonpublic information implicating Regulation FD (which…

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M&A Fiduciary Duties: Maximizing Shareholder Value

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You owe minority investors or other shareholders special fiduciary duties when you sell your company. As I discussed in a prior post, directors, officers and others who control companies (let’s call them “control persons”), owe certain baseline fiduciary duties to shareholders.  Under Delaware law, the benchmark for corporate governance in the United States, these duties apply…

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