September 19, 2019

Merger Agreements: Tools for Addressing Antitrust Risk

This Proskauer memo walks through the various methods used by dealmakers to address antitrust risks in M&A documentation. Here’s an excerpt:

A number of tools are commonplace for addressing antitrust risk, including efforts clauses, end dates, break or termination fees, material adverse event clauses, and control of investigation strategy. These provisions govern the parties’ obligations in the period prior to closing, and set out parties’ obligations if the transaction is not completed.

Transactions can be terminated mutually, and often are. But when that does not happen, the parties’ actions leading up to termination will be scrutinized for compliance with the various agreement provisions. When uncovering a breach could make the difference in who takes on the cost of the failed deal, understanding and strictly complying with the provisions of the agreement becomes critically important.

The memo reviews common contractual provisions used to address antitrust concerns, provisions, addresses how to ensure compliance with them, and provides examples of how they’ve played out in real world situations.

John Jenkins