Category Archives: Mergers & Acquisitions

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What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume VI —Organizational Conflicts of Interest:  When the Whole Is Less Than the Sum of Its Parts An organizational conflict of interest (“OCI”) arises when the performance of one contract undermines a contractor’s objectivity or creates an unfair competitive advantage with respect to another contract.  An agency cannot issue an award to a contractor that … Continue Reading

What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume V —The Land Mines Strewn Throughout the Data Room M&A transactions, like most transactions in life, involve a cost/benefit analysis.  Some cost/benefit analyses are relatively easy to perform.  For example, if I buy an energy efficient appliance, I can calculate the likely savings in energy costs over the useful life of the appliance (the … Continue Reading

What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume IV – Key Issues in Government Contracts Due Diligence This posting is the fourth in our ten-part series on unique issues that arise in connection with mergers and acquisitions involving government contractors and subcontractors.  Parts 1 through 3 focused on the structure of the transaction and the implications of that structure on the transfer … Continue Reading

What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume III—What Happens to Pending Proposals? Thus far in this ten-part series, we have discussed whether and how existing contracts with the Government can be transferred to the buyer or surviving entity when an acquisition, merger, or consolidation occurs. Today, we leave the world of existing contracts and turn to bids and proposals that are … Continue Reading

What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume II – Obtaining Consent to Assign a Government Contract This posting is the second in a ten-part series on unique issues that arise in the acquisition and disposition of a company that performs government contracts or subcontracts.  Part 1 focused on the types of deal structures that are subject to the anti-assignment statutes, and … Continue Reading

Delaware Court of Chancery Increases Scrutiny on Disclosure-Only M&A Class Action Settlements

As recently as 2014, nearly 95% of all mergers of public companies valued at $100 million or more triggered stockholder class action litigation. Historically, a large number of merger-related stockholder litigation settled solely on the basis of supplemental proxy disclosures coupled with the payment of the plaintiff’s attorneys’ fees.  Such disclosure-based settlements have been criticized … Continue Reading

What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume I – The Structure of the Deal and Government Consent With today’s posting, we begin a ten-part series on unique issues that arise in connection with the acquisition or disposition of a company that performs government contracts or subcontracts. These issues obviously come into play when the target company fits the bill as an … Continue Reading

Delaware Supreme Court Holds That a Stockholder Plaintiff Must Plead a Non-Exculpated Claim to Avoid Section 102(b)(7)-Based Dismissal When Seeking Damages From Independent and Disinterested Directors

In the consolidated appeal In re Cornerstone Therapeutics Inc., Stockholder Litigation and In re Zhongpin Stockholders Litigation, Nos. 564, 2014 and 706, 2014, 2015 Del. LEXIS 231 (Del. May 14, 2015), the Delaware Supreme Court considered for the first time the pleading burden a stockholder plaintiff must meet when seeking to recover monetary damages from … Continue Reading

Delaware Court of Chancery Rejects Share-Tracing Standing Requirement for Appraisal Petitioners

The Delaware Court of Chancery issued companion opinions clarifying Delaware’s standing requirements for appraisal petitions under 8 Del. C. § 262.  In In re Appraisal of Ancestry.com, Inc., C.A. No. 8173-VGC, 2015 WL 66825 (Del. Ch. Jan. 5, 2015), and Merion Capital LP v. BMC Software, Inc., C.A. No. 8900-VCG, 2015 WL 67586 (Del. Ch. Jan. … Continue Reading

Fiduciary Duties in the Context of Dent v. Ramtron Int’l Corp.

The Delaware Court of Chancery recently addressed a number of claims commonly made in the “ubiquitous” stockholder litigation that follows announcement of a public merger or acquisition transaction.  In Dent v. Ramtron Int’l Corp., C.A. No. 7950-VCP (Del. Ch. June 30, 2014), a stockholder of Ramtron International Corp. filed suit after Ramtron was acquired by … Continue Reading

Delaware Court of Chancery Underscores Heightened Pleading Standard Necessary to Support a Claim for Breach of Fiduciary Duty In Connection With a Merger

In Houseman v. Sagerman, C.A. No. 8898-VCG, 2014 WL 1478511 (Del. Ch. Apr. 16, 2014), the Delaware Court of Chancery (Glasscock, V.C.) granted, in part, a motion to dismiss filed by certain directors and the financial advisor of Universata, Inc. (“Universata” or the “Company”) arising out of the Company’s merger with HealthPort Technologies, LLC (“HealthPort”).  … Continue Reading

Delaware Court of Chancery Grants Summary Judgment Dismissing Breach of Fiduciary Duty Claims In Absence of Evidence of Directors’ “Conscious Disregard” of Fiduciary Duties

In In re Answers Corp. Shareholders Litigation, C.A. No. 6170-VCN, 2014 WL 463163 (Del. Ch. Feb. 3, 2014), the Delaware Court of Chancery (Noble, V.C.) granted summary judgment in favor of defendants in a stockholder class action for breach of fiduciary duty arising out of the merger of Answers Corporation (“Answers” or the “Company”) with … Continue Reading

Delaware Chancery Court Declines to Apply Offer-of-Judgment Rule in Appraisal Proceedings

In Huff Fund Investment Partnership v. CKx, Inc., Civil Action No. 6844-VCG, 2014 WL 545958 (Del. Ch. Feb. 12, 2014) (Glasscock, V.C.), the Delaware Court of Chancery denied a request by respondent CKx, Inc. (“CKx”) to compel the petitioning stockholder to accept the tender of an undisputed portion of the fair value of the petitioner’s … Continue Reading

Delaware Court of Chancery Applies Implied Covenant of Good Faith and Fair Dealing to Prohibit An Acquiring Entity From Diverting Revenues to Depress Payouts Under a Contingent Purchase Price Provision

In American Capital Acquisition Partners, LLC v. LPL Holdings, Inc., CA NO. 9490-VCG, 2014 WL 354496 (Del. Ch. Feb. 3, 2014), the Delaware Court of Chancery applied the implied covenant of good faith and fair dealing to a merger agreement’s contingent purchase price provision.  The court held that under the implied covenant an acquiring entity … Continue Reading

When Is a Non-Binding Term Sheet or Letter of Intent Enforced as a Binding Contract?

In almost all corporate transactions, the first piece of written documentation the parties exchange and execute (after a non-disclosure agreement) is a letter of intent or term sheet (“LOI”), which is intended to summarize the main deal points. And as many corporate transactions involve entities organized in Delaware, these documents often select Delaware as the … Continue Reading

Delaware General Corporation Law Amended to Speed Up the Consummation of Two-Step Merger Transactions

The Delaware General Corporation Law, 8 Del. Code (the “DGCL”), has been amended to add a new Section 251(h) providing for, subject to certain conditions, a more expeditious and less costly closing of a two-step transaction. This new section will simplify and streamline the going private process by eliminating the need for stockholder approval in … Continue Reading

Delaware Chancery Court Finds Merger “Entirely Fair” to Common Stockholders Despite the Merger Leaving Common Stockholders With No Consideration for Their Shares

In In re Trados Inc. Shareholder Litigation, Case No. 1512-VCL, 2013 Del. Ch. LEXIS (Del. Ch. Aug. 16, 2013), Vice Chancellor Laster of the Court of Chancery of the State of Delaware resolved the long-pending dispute involving the 2005 sale of Trados Inc. (“Trados”) to SDL plc for approximately $60 million. The Court held that … Continue Reading

Delaware Chancery Court Establishes Procedural Framework for Obtaining Business Judgment Review for Going Private Transaction Sponsored By Majority Stockholders

In In re MFW Shareholder Litigation, C.A. No. 6566-CS, 2013 WL 2436341 (Del. Ch. May 29, 2013), the Delaware Court of Chancery analyzed one of the most important open questions of Delaware corporate law: whether it is possible for majority stockholders to structure a going private transaction to avoid “entire fairness” review by the Court … Continue Reading

Delaware Chancery Court Decisions Highlight That a “Crucial Difference” In Analyzing Director Liability For “Bad Faith” In the Context of an M&A Sales Process Is the Seriousness of the Bidder

Two decisions earlier this year by the Delaware Court of Chancery in which the Court (Noble, V.C.) reached opposite conclusions on the divergent facts before it, serve to highlight that determining whether a bidder is “serious” in its pursuit of the target is a key factor in analyzing a target director’s liability for “bad faith” … Continue Reading

Delaware and California Courts Split as to Whether a Reverse Triangular Merger Results In an Assignment By Operation of Law, Creating Potential Pitfalls for Delaware and Other Foreign Corporations Located in California

In Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, C.A. No. 5589-VCP, 2013 WL 911118 (Del. Ch. Feb. 22, 2013, rev. Mar. 8, 2013), the Delaware Court of Chancery held that a reverse triangular merger does not result in an assignment of the assets of the surviving entity by operation of law. Although the Meso … Continue Reading

Delaware Has No Per Se Rule Against “Don’t Ask, Don’t Waive” Standstill Provisions, But Boards Must be Careful in Using Them

By John Stigi, John Tishler, and Edwin Astudillo In In re Ancestry.com Inc. Shareholder Litigation, C.A. No. 7988-CS, Chancellor Strine of the Delaware Chancery Court held that Delaware has no per se rule against “don’t ask, don’t waive” standstill provisions, but cautioned that boards using “a powerful tool like that” need to deploy it consistent … Continue Reading

California Federal District Court Holds That Section 1312(a) of the California Corporations Code Provides the Exclusive Remedy For Minority Shareholders Seeking to Challenge a Proposed Merger

In Dixon v. Cost Plus, Inc., No. 12-2721, 2012 U.S. Dist. LEXIS 90854 (N.D. Cal. Jun. 27, 2012), the United States District Court for the Northern District of California held that Section 1312(a) of the California Corporations Code precluded plaintiff-minority shareholder’s breach of fiduciary duty claim to the extent that the claim relied upon arguments … Continue Reading

IRS Launches Voluntary Worker Reclassification Program

On September 21, 2011, the IRS announced (in Announcement 2011-64) a new program that will allow employers to resolve their worker classification problems at a relatively low cost. This new Voluntary Classification Settlement Program (VCSP) is available to businesses that erroneously treat their workers or a class or group of workers as nonemployees or independent … Continue Reading

California Court of Appeal Refuses to Permit an Action for Rescission of a Strategic Transaction, Holding That a Board Has No Duty Under California Law to Include a “Fiduciary Out”

In Monty v. Leis, 193 Cal. App. 4th 1367, 123 Cal. Rptr. 3d 641 (2011), the California Court of Appeal, Second District, affirmed the order of the California Superior Court, Santa Barbara County, denying a motion by shareholders of Pacific Capital Bancorp (“PCB”), a California corporation, for a preliminary injunction to enjoin or rescind a … Continue Reading
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