This article originally published on Food Manufacturing.com on June 1.

2020 was an up-and-down year for mergers and acquisitions in the food and beverage industry.  With the onset of the COVID-19 pandemic in the first half of the year, deal making activity was largely put on hold.  In the second half of the year, however, M&A activity resumed in force such that the total number of food and beverage transactions for 2020 actually ended up slightly exceeding 2019.  And with private equity firms sitting on a large amount of cash that needs to be deployed and strong corporate balance sheets for strategic buyers, 2021 looks like it should be a banner year for food & beverage M&A.  However, buying and selling food & beverage companies presents a unique set of challenges.  This article provides an overview of certain legal considerations for parties engaging in M&A transactions in this sector to be aware of with the goal of providing actionable advice to maximize value.
Continue Reading Keys to Maximizing Value in Food & Beverage M&A Transactions

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 Main Street Lending Program, intended to provide credit support to small and medium sized businesses, became operational on July 6, 2020.[i] It includes many borrower-favorable economic terms, including a 5-year term, a low interest rate (capped at LIBOR + 3%), an interest payment deferral of 1 year and a principal payment deferral of 2 years, and a generally borrower-friendly amortization schedule.[ii] However, the Main Street Lending Program possesses certain characteristics that could negatively affect an acquisition, sale or other strategic transaction.

Since making its initial announcement in March of 2020, the Federal Reserve has released a series of documents and Frequently Asked Questions (“FAQs”) to shape and clarify the program details.  This article discusses several Main Street Loan requirements (around affiliation, dealing with other debt, compensation, dividends/distributions and employee and payroll retention) that require special attention if an M&A transaction of a privately-held company is being conducted or may be on the foreseeable horizon. This article also recommends some basic execution strategies since different approaches to M&A due diligence review and transaction structuring are necessary if the acquiror, the target/seller or both have applied for or received a Main Street Loan.
Continue Reading Some Strings Attached: Main Street Lending Program And Private Company M&A

In Nguyen v. Barrett, C.A. No. 11511-VCG, 2016 WL 5404095 (Del. Ch. Sept. 28, 2016) (Glasscock, V.C.), the Delaware Court of Chancery dismissed an amended complaint seeking damages for alleged disclosure violations in connection with a tender offer that had already closed.  The Chancery Court’s opinion demonstrates the challenges plaintiffs face when they pursue non-exculpated disclosure claims for damages post-closing.  It also shows that these challenges increase when the disclosure claims were previously pled but not pursued at the preliminary injunction stage — a time when the Chancery Court is still in a position to ensure stockholders are provided sufficient information to cast an informed vote.  The Court confirmed that the preferred practice is for plaintiffs to pursue disclosure claims at that earlier stage.
Continue Reading Delaware Court of Chancery Dismisses Post-Closing Disclosure Claims for Damages, Cautioning That Such Claims Are Best Pursued Pre-Closing