March 8, 2017
M&A Trends: Increasing Focus on Deal Certainty
This Cooley M&A blog is part of a series addressing M&A trends for 2017. It focuses on public company sellers’ heightened concerns about certainty during periods of regulatory & economic uncertainty. Here’s an excerpt discussing what those concerns may mean for 2017 deals:
Defining what constitutes a “material adverse change” that will let a buyer walk away from a signed deal may be subject to more negotiation than ever before. In addition to the “no MAC” out, parties are likely to focus on antitrust or other covenants relating to a party’s required efforts to obtain regulatory approvals, including through litigation and other affirmative “fix” obligations such as divestiture. Termination rights (and fees) tied to a party’s inability to obtain required approvals will also likely be more tailored and scrutinized.
Parties should pay more attention to these deal certainty provisions, particularly if potential changes in laws or regulations could undermine the economic rationale for the transaction.