Break fees have for many years been a conventional deal protection feature of public M&A transactions. These fees, often referred to as termination fees as they are tied to the termination provisions in the contract containing the deal terms, are typically payable by a target company where it elects to end an agreement for an M&A deal with a prospective buyer (almost always in order to accept a higher offer from another suitor). Such fees can promote deal certainty for a buyer by attaching adverse monetary consequences to a target terminating the deal.
Reverse break fees (as opposed to … Continue Reading
When a company is sold in an M&A deal, directors and officers remain exposed to claims with respect to activities pre-acquisition. Therefore, D&Os have a lot to worry about when their company is being sold. To protect themselves, D&Os on target boards should try to negotiate the purchase of a run-off D&O insurance policy with the acquiring company before the sale is complete, while they still have some bargaining power left.
Run-off policies are a one time purchase which last for a set duration (typically six years) and usually cannot be cancelled or amended once purchased. Sometimes D&Os will have … Continue Reading
Are you a D&O on a board of a company that is or may be an acquisition target?
You may be wondering what happens to your indemnity after the company you act for is acquired. First things first, if you have a contractual indemnification agreement with the company, check it and see what the duration of the agreement is. If there is no language with respect to duration in the contract, or if there is any ambiguity as to coverage following the acquisition, make sure you negotiate a written confirmation or acknowledgement with the acquiror that your indemnity will remain … Continue Reading
You act as a D&O on the board of a Canadian reporting issuer that is on an acquisition trail all over the world…..For each acquisition of a foreign entity, customary due diligence is conducted, but have you thought about potential D&O liability?
Beware as D&O’s on boards of issuers in Canada and the United States that acquire foreign entities can be held liable for bribery and corruption under the Corruption of Foreign Public Officials Act and the United States Foreign Corrupt Practices Act, respectively. Every person (which includes individuals and corporations) who, directly or indirectly, gives, offers or agrees … Continue Reading