Category: Practice Pointers

Middle Market M&A Key Deal Terms

A major law firm has completed a survey on trends and deal points in the M&A industry. The survey contains data and trends on many key points the M&A legal practitioner should be aware of as they negotiate M&A transactions, and the findings in the summary mirror our own experience in the market. In general in more recent transactions we have seen a continuing trend lower escrowed indemnity amounts, higher usage of representation and warranty (“R&W”) insurance, and generally more...

Dorsey Represents Galileo Financial Technologies in $1.2 Billion Acquisition by SoFi

Dorsey recently advised fintech company Galileo Financial Technologies, Inc. (Galileo) in connection with its announced agreement to be acquired by Social Finance, Inc. (SoFi) for $1.2 billion. “I am honored to have led a terrific Dorsey team of more than 20 attorneys and paralegals in helping our client Galileo Financial Technologies in achieving this significant milestone,” said Dorsey Partner Nolan Taylor.  “This transaction showcases Dorsey’s ability to bring a world-class deal team together to complete a major transaction. Our team’s...

Impacts of COVID-19 on Food, Beverage and Agribusiness M&A

The current macro and micro dynamics in the food and ag sector are rapidly shifting and uncertain, particularly in today’s world of the coronavirus. From a changing regulation and political environment to generational succession planning challenges, change and unknowns are creating both challenges and opportunities. As a result, consolidation in the food and ag sector is occurring at an unprecedented rate.  On March 25, 2020 Dorsey partner Michael Droke presented a webinar addressing the impacts of Coronavirus/COVID-19 on the M&A...

The “Long Goodbye” to Duty of Care as a Real Basis for Director Liability in M&A: The Legacy of Chancellor Allen

The fiduciary duty of care has become more aspirational than a real legal basis for potential director liability in M&A in the Age of DGCL Section 102(b)(7), Corwin v. KKR Financial Holdings LLC (Del. 2015) and In re Volcano Corp. Stockholders Litigation (Del. Ch. 2016).  At the 32nd Annual Tulane Corporate Law Institute in New Orleans on Thursday and Friday, March 5 and 6, 2020, a panel led by former Delaware Chief Justice Leo Strine (and including former Delaware Supreme...

The Importance of Full Disclosure

Directors and officers of corporations owe a duty of care and a duty of loyalty to both the corporation and its shareholders, although the duty of care for directors can be exculpated.  A breach of these fiduciary duties can expose such directors and officers to liability.  In Morrison v. Berry, No. 12808-VCG, 2019 Del. Ch. LEXIS 1412 (Ch. Dec. 31, 2019), a recent decision published by the Delaware Chancery Court, Vice Chancellor Glasscock granted motions to dismiss against the majority...

Subsidiary Spin-Off Considerations

Care must be taken when a U.S. entity spins off assets to a newly formed wholly-owned subsidiary so that the legal protections offered by the desired separation are realized. This article presents a few high-level issues to consider. Fraudulent Conveyance Risks Associated with the Separation. A conveyance would be deemed fraudulent by a court of law if a company transfers assets for less than reasonably equivalent value while the company was insolvent. A board of directors cannot approve a spin-off...

M&A and the Evaluation of Corporate Compliance Programs

Acquisitions of companies, especially target companies with international operations, require buyers to carefully scrutinize the target’s compliance programs, including the target’s compliance with the U.S. Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws. Doing so enables the buyer to more accurately assess the target’s value and risk profile, negotiate for the costs of any misconduct to be borne by the sellers and evaluate whether remedial steps are needed. When designing and executing a pre-M&A due diligence process on...

WeWork Debacle: Why Corporate Governance Matters

The recent saga of WeWork—a stylish co-working concept—provides a stark reminder of the importance of adhering to proven corporate governance principals.  The corporate form as a means of funding an enterprise works very well when the owners elect a board, the board hires and oversees management, and management adheres to metric-based goals.  However, when a cult of personality grows around a founder who believes he or she always knows best, paired with hands-off investors and a passive board, the governance...

Preparing for LIBOR Substitution: Commercial and Consumer Lending Considerations

As of December 31, 2021 (the “Effective Date”), the use of LIBOR as an index for commercial and consumer loans will likely cease—which presents lenders and other industry participants with the challenges to address: (a) the process for replacing LIBOR as an index for commercial and consumer loans outstanding as of the Effective Date that employ LIBOR as an index; and (b) how to proactively anticipate the end of LIBOR by beginning to substitute a new index for LIBOR between...

Next Level Due Diligence

Nearly every M&A transaction begins with a look at the possibilities: the strategic fit; the synergies; the drivers for the deal. Naturally enough, the next step will turn to an evaluation of risk.  Traditionally, legal exposure from toxic tort and other forms of product liability has rated high on the list of issues to identify and protect against — up there with environmental liabilities and compliance exposures. Recently, however, eye-popping damage awards have raised the stakes, suggesting that acquirers may...