In our “Auctions” Practice Area, we have posted the Toys R Us Shareholder Litigation opinion and there are some interesting comments on management retention negotiations in the context of a deal. Pages 47-51 (particularly 50-51) deal favorably with the CEO/director’s involvement in the transaction and the refusal to negotiate with bidders regarding management agreements. There is also mention in a footnote
regarding accelerating vesting of director options to correspond with the acceleration of employee options. A large portion of the discussion in the case deals with termination fees and the auction process.
Join us on September 21st for a webcast – “Winning Strategies in Auctions” – featuring David Katz of Wachtell Lipton and Eileen Nugent of Skadden Arps as they discuss the auction process, such as steps to reduce the impact of the “Winner’s Curse,” including analysis of the Toys R Us opinion.
Today, we have posted the next installment of DealLawyers.com “M&A Boot Camp.” This segment is brought by Wilson Chu of The Deal Guys’ Blog fame, doing his bit on negotiating tactics, such as:
– Gentleman Dealmaking
– Win-Win Does Not Mean: I Win Twice
– Negotiating Reps and Warranties
– Schedules Really Matter
– LOIs as Upfront Ego Management
– Take a Seventh Inning Stretch
– Use of Undermining Words and Phrases
– The Longer You Sit on a Problem, the More You’ll Own it
– Limitations of Emails and Conference Calls
– Educating Your Client to Support Your Position
– Go Deep – Be Prepared for Multiple Levels of Arguments
– Driving the Deal
– Always, Always be Prepared
Last month, the FASB and IASB proposed a standard — one of the most ambitious under the FASB/IASB convergence agenda — that would replace the existing requirements of FASB Statement No. 141, Business Combinations, and IFRS 3. FASB and IASB made their proposals in separate exposure drafts (here is the FASB’s exposure draft); the comment period ends October 28.
The proposals retain the fundamental requirement of IFRS 3 and Statement 141 that all business combinations be accounted for using a single method in which one party is always identified as acquiring the other. The major changes include a proposal that the acquired company must be measured at fair value; that goodwill attributable to any noncontrolling interests (not just the portion attributable to the acquirer) must be recognized; and that there would be fewer exceptions to measuring at fair value
Back on July 11th, the New York Times ran a Dealbook column by Andrew Sorkin that the then upcoming shareholder vote on the acquisition of Gillette would test the validity of so-called “fairness opinions.” Given that P&G shareholders approved the merger with an overwhelming level of support – 96%, according to this article – I wonder where that leads us on fairness opinions?
To learn more on this topic, see this thoughtful memo from Wachtell Lipton regarding conflicts in fairness opinions – as well as the transcript from our recent webcast: “Conflicts of Interest and Dicey Engagements.”