No Harm, but Foul: Process Considerations for “Interested” Transactions

After over seven years of litigation, the Delaware Supreme Court on December 11, 2015 upheld the Court of Chancery’s important decision in Nine Systems, which held that a 2002 recapitalization of a streaming media start-up unfairly diluted the minority stockholders when VC-backed directors failed to include the stockholders in an emergency round of financing […]

Mind the Gap (or Lack Thereof)

Two recent cases in the M&A space regarding earn-outs make one thing clear: express language in the definitive agreement prevails over any implied covenant of good faith and fair dealing. Fortis Advisors LLC v. Dialog Semiconductor PLC  (Del. Ch. January 30, 2015) (granting a buyer’s motion to dismiss a claim […]

Court Upholds Banker Liability for Inducing Faulty Process in Rural/Metro Sale

On November 30, 2015, in RBC Capital Markets, LLC v. Jervis (C.A. No. 6350-VCL) the Delaware Supreme Court upheld the principal rulings finding financial advisor RBC Capital Markets, LLC liable for approximately $76 million in damages for aiding and abetting breaches of fiduciary duties by former directors of Rural/Metro Corporation in connection […]

Proposing a Fix? Ready to Litigate the Fix? Recent Cases Should Guide Strategy

Companies considering transactions that raise serious antitrust issues should have a strategy for getting through the Hart-Scott-Rodino review process before finalizing the deal.

High-tech Mergers: Flying “High” on the Antitrust Enforcement Radar

The pace of strategic deal-making has electrified corporate America over the past year and has kept antitrust enforcers on their toes in analysing the potential competitive effects of these deals.

Rep and Warranty Insurance: Trends and Key Considerations

Over the last several years, transactional insurance, or representation and warranties insurance (“R&W Insurance”), has become a more prominent part of the M&A landscape.

Abandon Ship! Don’t Let Antitrust Risk Sink your Deal

Recent antitrust challenges to mergers, including the FTC’s recent federal court victory, have forced parties to abandon at least three deals in the past few months.

Utilizing Drag-Along Rights in Private Company Merger Agreements

In our January 2015 newsletter we discussed the recent decision of the Delaware Court of Chancery in the Cigna Health & Life Company v. Audax Health Solutions, Inc. case, which invalidated two purchaser-imposed requirements that are frequently found in private company mergers, specifically the conditioning of payment of merger consideration on […]

Delaware Chancery Court Weighs in on Fair Value in an Appraisal action

In the last few years, there have been numerous developments in the law and practice surrounding appraisal rights under Delaware law.

Do Merger Efficiencies Matter in Antitrust Review? Ninth Circuit Says “Yes”

The Ninth Circuit U.S. Court of Appeals last month sided with the Federal Trade Commission and required divestiture to unwind a consummated acquisition between two health care providers. In doing so, however, the court broke with long-standing precedent and accepted, in principle, a role for efficiencies in analyzing mergers. The […]

Books and Records – An Assist to Forum Selection

A frequent precursor to public company deal litigation is the books and records request under Section 220 of the Delaware General Corporation Law. Typically employed by plaintiffs as the first step of “information gathering” for derivative litigation, a company’s right to limit the potential geographic use of requested information has been validated by the Delaware courts.

The Latest in “Appraisal Arbitrage”

The practice of “appraisal arbitrage” has hit the radar for all public company dealmakers. Typically employed, to date, by activist investors and hedge funds, this strategic tool has recently received a shot in the arm with recent Court of Chancery opinions.

What Revlon Doesn’t Require

Two decisions by the Delaware courts (In re Family Dollar Stores, Inc. and C&J Energy Services Inc. v. City of Miami General Employees’ and Sanitation Employees’ Retirement Trust have more precisely defined the contours—substantive and procedural—of exactly what is (and what is not) required by a board of directors in complying with “Revlon” duties related to the sale of a controlling stake in a Delaware corporation.

Learning the Hard Way HSR Gun Jumping – Lessons from Flakeboard/SierraPine

Given the many opportunities and challenges that come from integrating two companies following a strategic transaction, including unlocking significant synergies and cost savings as a result of the combination, it is unsurprising that merging parties are often enthusiastic about moving forward with the process as soon as possible. Equally, it […]

M&A Releases and Post-Closing Indemnity Obligations in Private Company Merger Agreements

In Cigna Health & Life Insurance Company v. Audax Health Solutions, Inc. (Del. Ch. November 26, 2014), the Delaware Court of Chancery invalidated two buyer-imposed requirements that are frequently found in private company mergers, specifically the conditioning of payment of merger consideration on a release and certain aspects of post-closing […]

Can we Talk? New York Court Broadens Common-Interest Privilege for Pre-Closing Communications

Aware that parties to an acquisition need to share legal advice in connection with pre-closing activities, a New York appellate court permits the common-interest privilege to protect pre-closing communication, even without pending or anticipated litigation.

Is My Non-Binding Letter of Intent Actually Binding?

The Delaware Supreme Court rules that an integration clause in an acquisition agreement does not transform non-binding earnout provisions in a letter of intent into binding obligations under the definitive agreement.

A Reminder on Adequate Process

The Delaware Chancery Court analyzes a dilutive recapitalization transaction under the entire fairness standard of review and finds flawed process, despite a fair price in the deal.

Exploring the Scope of Recovery for Fraud Claims in Private Company Transactions

Court reviews detailed allegations and potential scope of recovery for fraud alleged against pre-closing officers, directors and, notably, innocent selling stockholders in a private company acquisition.

Cooley 1H 2014 Deal Activity

Cooley closes 97 deals with an aggregate value of $36.9 billion Cooley continues to be a leading law firm for clients seeking to transform their businesses through strategic transactions. In the first half of 2014, we advised on 91 signed M&A deals with an aggregate value of $30.7 billion. Year to date, […]

Exclusive Forum Provisions

Exclusive forum provisions (in a corporation’s bylaws or charter) designate a specific court(s) to serve as the exclusive venue(s) for intra-corporate litigation—e.g., derivative suits; actions (including class actions) asserting breach of fiduciary duty by a director, officer, or other employee to the corporation or its shareholders, and other disputes asserting […]

High-Tech Mergers: Top of the Antitrust Enforcement Agenda

Antitrust enforcement in high-tech industries – those that employ the most advanced, cutting-edge technology – is a top priority for the Department of Justice (DoJ) and Federal Trade Commission (FTC).

SEC Issues Guidance on Proxy Voting and Proxy Advisory Firms – Will this Change Proxy Voting Behavior or the Role of Proxy Advisers?

The Securities and Exchange Commission (SEC) recently issued regulatory guidance (see related Q&A) regarding proxy voting responsibilities, including the role of proxy advisory firms and use of advisory firm advice. Implicit in the staff’s guidance is the expectation that firms and advisers incorporate updates to their voting policies and processes […]

Understanding Attorney-Client Privilege in Internal Business Investigations

In a recent DC Circuit case, In re: Kellogg Brown & Root, Inc., No. 14-5055 (June 27, 2014), the DC Court of Appeals clarified the scope of the attorney-client privilege in the context of a business’s internal investigation and described four aspects of an internal investigation that may vary while […]

Amendment to Delaware Statute of Limitations Rules – Drafting Tips

A recent amendment to Delaware law clarifies certain statute of limitations rules, providing parties with increased flexibility to control survival periods for acquisition agreement indemnity provisions and related breach-of-contract claims. The amendment to the Delaware General Corporation Law (the “DGCL”) is described below, along with drafting tips for successfully incorporating […]

SEC Issues Guidance on Tweets and Similar Social Media Communications

Recognizing the growing interest in using technologies such as social media to communicate with security holders and potential investors, the Securities and Exchange Commission released a new Compliance and Disclosure Interpretation addressing the use of hyperlinks in Tweets and other social media communications to satisfy the SEC’s legending requirements. Historically, […]

“Good Faith” Covenants for Earnouts

The Delaware Chancery Court recently reviewed the application of the implied covenant of good faith and fair dealing in connection with “earnout” provisions in an acquisition agreement. In American Capital Acquisition Partners, LLC v. LPL Holdings, Inc., the court allowed a claim for a breach of the implied covenant to […]

A Series of Proposed Amendments to Delaware Corporate Law

Summarized below are the currently proposed changes to the Delaware General Corporation Law (the “DGCL”) that, if enacted, would become effective on August 1, 2014.

Activists and the Poison Pill

In re Third Point LLC v. Ruprecht, et al. (Del. Ch. May 2, 2014). In the much anticipated review of Sotheby’s two-tiered stockholder rights plan adopted in response to Third Point’s activist campaign and proxy contest, the Delaware Court of Chancery held that the Sotheby’s board did not breach its […]

United States v. Bazaarvoice: A Cautionary Antitrust Tale for High-Tech Mergers

The recently concluded Department of Justice enforcement action against Bazaarvoice, Inc.’s 2012 acquisition of rival PowerReviews, Inc. is a reminder of important principles for antitrust enforcement in high-tech industries.

Recent Trends in Antitrust and Regulatory Risk – Shifting in M&A Agreements

The recent drumbeat of aggressive antitrust and regulatory merger enforcement has put a spotlight on the importance of understanding the antitrust and regulatory risks raised by a potential deal, and efficiently allocating that risk in the transaction agreement. While transactions in dynamic technology, healthcare/life sciences, new media and telecom industries […]

Appraisal Arbitrage – A Rising Star in the Activist Playbook

Shareholder activism gains momentum and publicity with each passing proxy season. Activist-focused funds increase capital and investor expectations, proxy contest tactics become more practiced and skillful, nominees for board positions are industry tailored and more sophisticated and social media increases the reach (and entertainment value) of activist communications. What comes […]

Kahn v. M&F Worldwide

In a much anticipated judicial development, the Delaware Supreme Court affirmed the holding of In re MFW Shareholders Litigation (Del. Ch. 2013) that if certain procedural protections are in place from the outset of a transaction, a controlling stockholder buyout otherwise subject to the entire fairness standard could be subject […]

In re Rural Metro Corporation Stockholders Litigation

In Rural Metro, the Delaware Chancery Court held that RBC Capital Markets, LLC, as financial advisor to the Rural Metro (Target), had aided and abetted Target’s directors in breach of their fiduciary duties in connection with its sale to Warburg Pincus (Buyer). This is the latest in a string of […]

FTC Expands HSR Reporting Obligations – Targeting Pharmaceutical Licensing Deals

A new Federal Trade Commission (“FTC”) rule, which became effective December 16, 2013, targets the pharmaceutical industry and requires Hart-Scott-Rodino Act (HSR) notices for a broader array of licensing transactions, expanding the types of deals that have to be notified to the government to allow antitrust enforcement agencies to scrutinize […]

Revised 2014 Hart-Scott-Rodino Antitrust Thresholds – Effective February 24, 2014

The Federal Trade Commission has completed its annual adjustments to the filing thresholds under the Hart-Scott-Rodino (HSR) Act. The new, higher thresholds will take effect on February 24, 2014 and apply to all transactions which close on or after this date but before the next round of adjustments takes effect in […]

Lengthening the Indemnification Claims Period

Delaware law limits parties’ ability to contractually agree to lengthen the time period for making claims beyond the statute of limitations that would otherwise apply to the underlying claims. A line of Delaware cases (the most well known of which is GRT, Inc. v. Marathon GTF Technology, Ltd.) have held […]

Ten Most Influential M&A Developments of this Millennium

As we turn the page on a new year, many of us reflect upon the noteworthy events of the past as we look forward to the future. Deal lawyers are not exempt from this phenomenon. We present herewith our choices for the 10 Most Influential M&A Developments of this Millennium […]

Cooley Bolsters East Coast M&A Capability

On January 1, 2014, Cooley combined with Dow Lohnes PLLC’s Washington, DC office. Through the transaction, Cooley added more than 50 attorneys and many other non-lawyer professionals and industry specialists. Among those additions, we have added three partners to our M&A practice with significant deal experience, particularly in the communications, media […]

Developments Under Delaware Law in the Enforceability of Non-Reliance Provisions Against Fraud Claims

A series of cases in 2013 refined the law in Delaware relating to the enforceability of non-reliance clauses. Non-Reliance clauses are generally intended to limit a buyer’s ability to make fraud claims based upon representations made outside of the acquisition agreement (e.g., in diligence materials in the data room, spoken […]

Great Hill Equity Partners v. SIG Growth Equity Fund

In Great Hill, the court held that the right to assert the privilege over attorney-client communications and ownership of such communications passes to the acquirer in acquisitions structured as mergers under Delaware law. This case clarifies the law in Delaware mergers by expressly refusing to follow prior New York case […]

No Deal Too Small: FTC and DOJ Target Non-HSR Reportable Tech Deals in 2013

The FTC recently announced a settlement with a specialty software developer, requiring it to divest a business that it had acquired more than a year earlier for $8.7 million. The challenge to an acquisition that was so small that it did not have to be reported under the Hart-Scott-Rodino Act […]

Fraud and Non-Reliance and Exclusive Remedy Clauses in Acquisition Agreements

Cooley partner Craig Menden coauthored the memo, Fraud and Non-Reliance and Exclusive Remedy Clauses in Acquisition Agreements, to the Subcommittee on M&A Jurisprudence.

In Re Trados Incorporated Shareholder Litigation

In a case involving a common fact pattern, Trados “Part 2” provides a very helpful analysis of a board’s fiduciary obligations when common stockholders receive no consideration in an acquisition. Trados was acquired in 2005 for $60 million in cash and stock. The preferred stockholders received $52.2 million of the […]

Delaware General Corporation Law §251(h)

The amendments to Delaware law streamlining the back-end merger process in transactions structured as two-step tender offers went into effect August 1. DGCL 251(h) and the related changes to the DGCL permit acquirers to complete the back-end merger after receiving 50% plus one share tendered without being required to obtain […]

California Corporations Code §603(b) Amended

Amendments to California Corporations Code (“CCC”) §603(b) were signed into law on August 16, 2013 and will become effective January 1, 2014. CCC §603(b) relates to written consents of shareholders in certain reorganization transactions. CCC §603(b) currently requires that a corporation approving a reorganization by shareholder written consent either (1) solicit […]