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The COVID-19 pandemic has caused severe disruption, distress and uncertainty for companies across almost every industry. While this initially resulted in a substantial slow-down in the M&A market, transactional activity is expected to accelerate in certain areas as the economy begins to recover; for example, we expect to see more carveouts by companies that seek to divest non-core assets, acquisitions of distressed companies, financings of independent companies that may have liquidity issues, and divestitures or joint ventures by private equity funds that seek to exit investments or bring in new partners. Prospective sellers and buyers alike should have an increased focus on specific considerations as they evaluate new opportunities during and post-COVID-19.

We anticipate lasting changes to three main categories of deal terms in M&A transactions as companies and the economy begin to recover from the pandemic: execution risk, risk allocation and purchase price. Special considerations that should be taken into account in each of those categories include the following:


Continue Reading The Impact of COVID-19 on M&A Transactions — Part II: Deal Terms

The COVID-19 pandemic has caused severe disruption, distress and uncertainty for companies across almost every industry. While this initially resulted in a substantial slow-down in the M&A market, transactional activity is expected to accelerate in certain areas as the economy begins to recover; for example, we expect to see more carveouts by companies that seek to divest non-core assets, acquisitions of distressed companies, financings of independent companies that may have liquidity issues, and divestitures or joint ventures by private equity funds that seek to exit investments or bring in new partners. Prospective sellers and buyers alike should have an increased focus on specific considerations as they evaluate new opportunities during and post-COVID-19.
Continue Reading The Impact of COVID-19 on M&A Transactions — Part I: Due Diligence and Operational Issues

*This post originally appeared as an article on Sustainable Food News.

Sustainability initiatives have taken on increasing significance in the food and beverage industry in recent years. With an increased focus on branding through social media and consumer demand for environmentally conscious business practices, companies are under increased pressure to demonstrate a commitment to conservation.

This has led many companies to begin investing in developing alternative business practices, aimed at creating an overall positive environmental impact and staying current in a market that has experienced rapid changes in recent years.
Continue Reading The Increased Role of Sustainability in the Food and Beverage Industry

This post was originally published on FoodDive.com.

When considering an acquisition of a food and beverage company, potential buyers of a company or its assets should pay particular attention to U.S. Food and Drug Administration requirements and their implications on the target’s business.

Buyers should be cognizant of the regulatory issues at the beginning of the process so that their risk can be assessed in the context of the transaction, and in turn, be addressed by specific representations, covenants and indemnification provisions in the transaction documents. The following considerations should be top of mind throughout the course of due diligence and negotiations. 
Continue Reading How FDA Considerations Impact Food and Beverage Acquisitions

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 Cypress Semiconductor Corporation pursuant to an all-cash tender offer.  The plaintiff alleged that Ramtron’s directors breached their fiduciary duties by failing to maximize the value of the company, adopting several “preclusive” and “draconian” deal protection devices, and failing to fully disclose material information in the company’s proxy statement, and that Cypress aided and abetted those breaches.  The Court granted the defendants’ motion to dismiss, finding that the plaintiff failed, in each count, to state a claim upon which relief could be granted.  In doing so, the Court essentially set forth a roadmap for stockholders considering so-called “strike suits” and for corporations in preempting such suits.
Continue Reading Fiduciary Duties in the Context of Dent v. Ramtron Int’l Corp.

In Branin v. Stein Roe Inv. Counsel, LLC, C.A. 8481-VCN, 2014 WL 2961084 (Del. Ch. June 30, 2014), the Delaware Court of Chancery held that a vested right to indemnification may not be rescinded by a subsequent amendment to the governing corporate document.

Francis S. Branin Jr. (“Branin”) owned and managed the investment management firm Brundage, Story & Rose, which was sold to Bessemer Trust, N.A. (“Bessemer”) in 2000. Nearly two years later, Branin left Bessemer and was hired by Stein Roe Investment Counsel LLC (“SRIC”), taking former clients with him.  Bessemer proceeded to sue Branin under New York’s Mohawk Doctrine, which refers to an implied covenant imposed on the seller of a business that prevents the seller from approaching former customers and attempting to regain their patronage after the seller has purported to transfer the sold business’ goodwill to the purchaser.  As a result of the legal claim by Bessemer, Branin sought indemnification under the directors and officers indemnification provisions of the operating agreement of SRIC (the “Operating Agreement”).


Continue Reading Delaware Court of Chancery Rejects Indemnification Sleight of Hand

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 the second step of a two-step merger transaction. Under this new rule, completing a going private transaction in Delaware will be faster, more efficient and less costly than before.


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

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 the transaction, which benefited the preferred stockholders and certain executives of Trados but left the common stockholders with nothing, was procedurally flawed but ultimately fair to the company’s stockholders. The Court reviewed the decision of the board of directors approving the sale under the “entire fairness standard” which is the most stringent standard of review in Delaware. The decision serves as a cogent reminder to private equity and venture capital investors that they should run a proper sale process when planning a liquidity event in particular if certain constituents of the corporation will not benefit from the liquidation.


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