In most acquisitions, the distance between signing and closing is measured in weeks, if not months. During this interim period the buyer’s ability to safeguard or control the target’s business is limited. This is an uncomfortable position that can be exacerbated if the transaction is consummated between strategic competitors or in a market with substantial… → Read More
Category Archives: Contractual Matters
Subscribe to Contractual Matters RSS FeedMAC-Ademy: An Introduction to the Material Adverse Change Clause
Posted in Contractual Matters, Private Transactions, Public M&A, StrategyRecently, a curious team of our M&A bloggers presented an internal roundtable discussion aimed at understanding some of the key issues regarding material adverse change (otherwise known as “MAC”) clauses. Part of what came out of that discussion is a presentation that provides an introduction to the MAC clause and some analysis regarding current trends… → Read More
Financing the Acquisition of a Canadian Business: Cross-Border Credit Transactions
Posted in Contractual Matters, Private Transactions, Public M&AThe acquisition of a Canadian business by US-based purchasers is often financed by way of a cross-border credit transaction involving a Canadian borrower (such as when the US purchaser sets up a Canadian company to make the acquisition, often for tax reasons), possibly also a US borrower (or as is common when a new Canadian… → Read More
Five Considerations for Borrowers Completing a Disposition
Posted in Contractual MattersIn my prior post, Seven Considerations for Borrowers Completing an Acquisition, I described seven key issues that borrowers should consider when completing an acquisition. Similarly, if your company is considering a disposition (either of assets or of shares) and is a borrower under a credit facility, it is important to consider whether the proposed disposition… → Read More
Canadian Contractual Interpretation Law: A New Edition
Posted in Contractual MattersThe second edition of Canadian Contractual Interpretation Law by Geoff Hall (one of our contributing bloggers) has just been published. The book is the only text focused on contractual interpretation under Canadian common law and the new edition includes commentary on contractual interpretation under Quebec civil law. As such, it is a helpful resource for… → Read More
Seven Considerations for Borrowers Completing an Acquisition
Posted in Contractual MattersIf your company is considering an acquisition, and it also happens to be a borrower under a credit facility, it is important that you review the credit documentation to ensure that the acquisition will not result in a breach of any of the provisions. Here are seven key questions to ask when identifying possible issues under… → Read More
The Implied Covenant of Good Faith and Fair Dealing: Delaware Rocks On
Posted in Contractual MattersEarlier this month, the Delaware Court of Chancery released its opinion in Winshall v. Viacom International, Inc. The Court dismissed a claim for breach of the implied covenant of good faith and fair dealing in a merger agreement. The sellers of Harmonix Music Systems, Inc., the creator of the music-oriented video games Rock Band and Guitar… → Read More
Earn-outs – Key Considerations in M&A Transactions
Posted in Contractual Matters, Private TransactionsThis post was co-authored by Marek Lorenc, an articling student in our Calgary office. In recent years, and particularly since the financial crisis, earn-outs continue to find favour in private (and occasionally public) acquisitions as a means of bridging the valuation gap between purchasers and sellers. The drafting of earn-out clauses can be challenging, as… → Read More
M&A Deal Terms – What’s Market?
Posted in Contractual MattersThere’s an ever-growing list of reports and studies that collect, analyze and scrutinize various deal terms and other aspects of M&A transactions – or at least it feels that way. Like most committed M&A lawyers, we collect this stuff and I, for one, admit to spending a fair bit of time pouring over some of… → Read More
Which M&A Representations Do I Really Need?
Posted in Contractual MattersM&A lawyers often get stuck negotiating pages and pages of representations and warranties in purchase agreements on behalf of their buyer clients. So let’s say I am stranded on a desert island negotiating with “Wilson,” the volleyball, for the purchase of a coconut water business. Wilson will only give me five representations in our purchase… → Read More
Are You a Target? Protecting Yourself against D&O Liability
Posted in Contractual MattersAre 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… → Read More
Confidentiality Agreements – Part 1 – Some Initial Considerations
Posted in Contractual MattersHow often are you called upon to sign a confidentiality or non-disclosure agreement? Want to participate in the sale process for a business you’re interested in acquiring? Sign this confidentiality agreement first. Need access to important commercial information? Sign a confidentiality agreement. Want to meet with key executives as part of your due diligence? Not before… → Read More