Monthly Archives: February 2023

February 13, 2023

SPACs: Closing the Book on a Terrible Year

White & Case recently published its 2022 US de-SPAC & SPAC Data & Statistics Roundup, and the numbers are every bit as ugly as you think they are.  Here are some highlights:

– The total value of de-SPAC transactions completed last year was $59.9 billion. That’s a decrease of 84% versus the $368 billion of de-SPACs completed in 2021.

–  De-SPAC deal count proved more resilient but also declined from 2021 levels, sliding 40% year-on-year. There were 119 de-SPAC M&A transactions in 2022, compared to 197 deals the previous year.

– The number of SPAC IPOs slid from 612 to just 83, and SPAC IPO proceeds fell 92 percent from $157 billion in 2021 to $13 billion in 2022.

– SPAC IPO activity has regressed throughout the year, with only seven listings securing proceeds of $540 million in Q4 2022. Q4 was the weakest quarter in 2022 and marked the third successive quarter where SPAC IPO deal count and IPO proceeds have fallen.

About the only good news for the SPAC biz is that de-SPAC M&A actually improved through the course of the year. Only 15 de-SPAC deals worth $8 billion were completed in the first quarter of 2021. In the fourth quarter, however, the deal count stood at 46, with deal value recovering to $22 billion.

John Jenkins

February 10, 2023

Deal Lawyers Download Podcast: Datasite’s 2023 Global M&A Outlook

We just uploaded another of our Deal Lawyers Download podcasts.  This edition features my interview with our first return guest – Datasite’s Mark Williams.  Mark first visited us last July to discuss Datasite’s mid-year M&A Outlook Survey and returned to updated us on some of the findings in Datasite’s 2023 Global M&A Outlook. This 8-minute podcast addressed the following topics:

– How Datasite’s business positions it to identify deal trends

– What Datasite is seeing that makes it optimistic about 2023 M&A?

– What the data says about M&A activity in specific industry sectors and regions?

– Key takeaways for dealmakers based on insights from the Datasite platform?

If you have something you’d like to talk about, please feel free to reach out to me via email at I’m wide open when it comes to topics – an interesting new judicial decision, other legal or market developments, best practices, war stories, tips on handling deal issues, interesting side gigs, or anything else you think might be of interest to the members of our community are all fair game.

John Jenkins

February 9, 2023

M&A Agreements: Making Sure Clients Understand Them is a Big Part of the Job

Andrew Abramowitz recently blogged about a really critical part of the deal process that lawyers overlook at their peril – making sure that clients understand the terms they’re agreeing to before they sign on the bottom line. Andy points out that it isn’t really the use of legalese that’s the problem, but many clients’ lack of experience with these agreements:

When people think of legalese, they primarily are concerned with arcane words such as “heretofore” or whatever. But a more significant factor in client incomprehension, I think, is that they don’t have the background knowledge with these agreements to know the purpose of various provisions and how they all interact. For example, in a typical agreement for acquisition of a business, there are provisions relating to the seller’s potential liability to buyer after the closing, including various defined terms such as Fundamental Representations, Cap, Basket and Survival Period.

These concepts are, needless to say, not experienced by the average person in their lifetime, even if it’s a well-educated lifetime. But the idea behind all of it is not terribly complex and is very important to the parties in an M&A deal: The buyer should be compensated for damage that occurs after closing if the seller misrepresents facts about the business being purchased when the agreement is signed, but assuming this misrepresentation is not intentional/fraudulent, there should be reasonable limits placed on the amount of compensation and the length of time after closing during which the buyer can bring this up.

So, while it’s unrealistic to expect clients to start using all of the contractual lingo in ordinary conversation, it is important for the lawyer to impress upon the client the importance of, to take the above example, ensuring that representations in the agreement are correct to avoid post-closing liability.

He suggests that lawyers remember how clueless they were about the intricacies of M&A agreements when they were law students or junior associates, and keep the need to ensure client comprehension of key deal terms in mind. Sure, this may not be terribly relevant if you’re working with a private equity fund that has half a dozen reformed deal lawyers on your deal team, but there are a lot of clients who don’t fit that mold – particularly on the sell side.

John Jenkins

February 8, 2023

Controllers: MFW Isn’t Just for Squeeze-Outs

Debevoise recently published the latest edition of its Special Committee Report, which surveys transactions announced during the period from July through December 2022 that used special committees to manage conflicts & cases ruling on issues relating to the use of special committees. The report also reviews the continuing evolution of the MFW doctrine, and highlights the fact that it has utility well beyond the squeeze-out merger setting in which it arose.

The report notes that examples of the use of MFW outside this setting include the Chancery Court’s decisions in In re Martha Stewart Living Omnimedia S’holders Litig., (Del. Ch.; 8/17), which involved a 3rd party sale, and IRA Trust FBO Bobbi Ahmed v. Crane, (Del. Ch.; 12/17), which involved the recapitalization of NRG Yield, Inc. Both of those transactions required stockholder approval under Delaware law, but this excerpt notes that Delaware courts have made it clear that MFW can be used in situations where stockholder approval wasn’t necessary:

The Martha Stewart and NRG decisions involved transactions that were mandatorily subject to stockholder approval under Delaware corporate law, but the Delaware courts have held that the MFW protections can also be used in transactions that are not otherwise subject to stockholder approval. For example, in a challenge to an incentive compensation award by Tesla to its controller Elon Musk, the Court of Chancery found that the grant of the award—involving stock options with a potential value of over $50 billion—was subject to entire fairness review.

However, the court went out of its way to note that if the parties had utilized the protective provisions of MFW, the case might have been dismissed at the pleading stage: “Had the Board conditioned the consummation of the Award upon the approval of an independent, fully functioning committee of the Board and a statutorily compliant vote of a majority of the unaffiliated stockholders, the Court’s suspicions regarding the controller’s influence would have been assuaged and deference to the Board and stockholder decisions would have been justified.

The report also points out that the Chancery Court has recently applied MFW in the context of a challenge to a corporate charter amendment and says that controllers & their advisors should consider using the path to business judgment rule laid out in MFW in any transaction with the controlled company where entire fairness review is possible.

John Jenkins

February 7, 2023

Activism: Implications of Interlocking Directorate Enforcement

This Cleary memo discusses the outlook for shareholder activism in 2023. In addition to highlighting the potential implications of universal proxy, the growth of pass-through voting & the tug of war between ESG and anti-ESG activism, this excerpt from the memo points out that the DOJ’s renewed interest in the Clayton Act’s prohibition on director interlocks may also have a significant impact:

Activists may also find their directors under the microscope as a result of the DOJ’s stated intention to ramp up enforcement of the Clayton Act’s prohibition on interlocking directorates. This long-standing statutory provision, which bans competitive companies from having overlapping directors and officers in an effort to prevent collusion, has not been a primary focus of the U.S. antitrust agencies in the past.

This appears to be changing. In October 2022, seven directors from five companies resigned in response to an interlocking directorate probe from the DOJ, which also announced that its Antitrust Division would be “undertaking an extensive review of interlocking directorates across the entire economy and will enforce the law.”

The memo says that activist-nominated directors will need to be more closely assessed for antitrust and interlocking directorate concerns. These concerns will be particularly elevated when the nominee is an insider of the activist. The DOJ’s use of an agency or deputization theory of liability may present the greatest risk, because as the memo points out, even if one individual doesn’t sit on the boards of competing companies, the DOJ may find an interlocking directorate if different individuals representing the interests of the activist sit on the boards of competitors.

John Jenkins

February 6, 2023

Tomorrow’s Webcast: “Activist Profiles & Playbooks”

Tune in tomorrow for the webcast – “Activist Profiles & Playbooks” – to hear Joele Frank’s Anne Chapman, Okapi Partners’ Alexandra Higgins, Spotlight Advisors’ Damien Park and H/Advisors Abernathy’s Dan Scorpio discuss lessons from 2022’s activist campaigns & expectations for what the dawn of the universal proxy era may have in store!

We are making this webcast available on as a bonus to members – it will air on both sites.

Members of this site are able to attend this critical webcast at no charge. If you’re not yet a member, try a no-risk trial now. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595. You can sign up by credit card online. If you need assistance, send us an email at – or call us at 800.737.1271.

We will apply for CLE credit in all applicable states for this 1-hour webcast. You must submit your state and license number prior to or during the program. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval; typically within 30 days of the webcast. All credits are pending state approval.

John Jenkins

February 3, 2023

Annual Survey of Delaware Judicial Decisions

Over on the Delaware Corporate & Commercial Litigation Blog, Francis Pileggi and Sean Brennecke have posted a review of last year’s key Delaware corporate & commercial law decisions. The authors note that their focus is on the “unsung heroes” among these decisions – important cases that haven’t received a lot of attention from the media or trade publications.  This excerpt provides an example of what they mean:

In the Chancery decision of Hawkins v. Daniel, C.A. No. 2021-0453-JTL (Del. Ch. April 4, 2022), the court found that an irrevocable proxy was ambiguous and it did not state that it would “run with the shares” based on the “special principles of contract interpretation” applicable to proxy agreements.  This 85-page opinion needs to be read by anyone who wants to know the latest Delaware law on enforceability of proxies.

There is a lot here – the article originally appeared in two installments in the Delaware Business Court Insider and ran a total of 34 pages.

John Jenkins

February 2, 2023

Non-Competes: Delaware’s No Walk in the Park When It Comes to Enforceability

In early January, the Vice Chancellor Zurn’s issued her decision in Ainslie v. Cantor Fitzgerald, (Del. Ch. 1/24), which addressed the limitations on enforceability of non-compete covenants in partnership agreements. That decision followed on the heels of her decision in Kodiak Building Partners v. Adams, (Del. Ch.; 10/22), which invalidated a non-compete agreement entered into in connection with the sale of a business.

With all the attention being paid to the FTC’s proposed ban on non-competes, I thought these cases merited a blog. However, I also sincerely hoped somebody else would spare me the task of writing it, since now that I’m managing site in addition to this one, people expect me to do  actual work – and that leaves me less time to blog. Fortunately, Weil’s Glenn West recently came to my rescue with this blog, which reviews these two recent decisions and makes the point that the Delaware Chancery Court can be a very demanding place when it comes to enforcing non-competes:

Delaware courts are regarded as reliably contractarian in their interpretation and enforcement of written agreements. That means that Delaware courts do not re-write agreements that parties make, and will enforce both good deals and bad deals in accordance with the written terms. But Delaware’s contractarianism is mediated through long-standing common-law rules that sometimes do refuse to enforce the terms of an otherwise voluntary agreement, even one entered into by sophisticated parties.

Two recent Delaware Court of Chancery decisions, both by Vice Chancellor Zurn, illustrate the effect of a common-law override to strict contractarianism respecting the enforcement of non-compete agreements and forfeiture-for-competition provisions, both in the sale of business and in the employment context.

After reviewing the two decisions, the blog closes by observing that parties who want Delaware courts to enforce non-competes should follow Vice Chancellor Zurn’s advice in Ainslie and ensure “that they ‘(1) [are] reasonable in geographic scope and temporal duration, (2) advance a legitimate economic interest of the party seeking its enforcement, and (3) [will] survive a balancing of the equities.’”

John Jenkins

February 1, 2023

Merger Investigations: Expect a Long Slog on Both Sides of the Pond

Dechert recently published its annual  “Dechert Antitrust Merger Investigation Timing Tracker” (DAMITT) report on the timing of significant merger investigations, and its bottom line is that deals subject to significant merger investigations continue to face an elevated risk of being blocked or abandoned in both the US & the EU – even if a relatively small number deals receive that level of scrutiny.  Here are some of the key takeaways:

United States

– 60% of significant investigations concluded with a complaint or abandoned transaction in 2022. This shatters last year’s record of 37%. The 10 complaints filed in 2022 are also a DAMITT record. Those are strong headwinds for dealmakers heading into 2023.

– Only two significant merger investigations concluded in Q4 2022, making the 20 concluded in 2022 the lowest in DAMITT history. DOJ did not conclude any investigations in Q4.

– The overall intervention rate remains low. Just around 0.5% of transactions notified in 2021 had resulted in a concluded investigation as of the end of 2022.

– The average duration of significant investigations ticked up to 11.8 months, just shy of the 11.9-month DAMITT record set in 2019. The Q4 average was 15.4 months but it is based on just two concluded FTC investigations. Still, the risk of a prolonged investigation has grown, especially over the last year.

European Union

– 33% of all significant investigations were blocked by the EC or abandoned by the parties in 2022, with only 25% of deals obtaining clearance after a Phase II investigation.

– The number of significant investigations concluded by the EC is slowly picking up, but the number of Phase I remedy cases remains 30 percent below the 2016-2021 average.

– Intervention rates increased in the EU, with 4.9% of notified transactions resulting in a significant investigation in 2022. They are not yet back to pre-pandemic levels, though.

– The average duration of Phase II investigations concluded in 2022 was 18.4 months, nearly one month shorter than in 2021, while average duration of Phase I remedy cases dropped by two months to 8.3 months. New DAMITT data however show that nearly 30% of Phase I remedy and Phase II cases have lasted more than 10 and 18 months, respectively.

The report concludes that parties to significant deals in the US & EU should prepare for a long slog with antitrust regulators.  In the US, they should plan on at least 12 months for the agencies’ investigation of their proposed deal and another nine to 10 months to litigate an adverse decision.  In the EU, parties should be prepared for an even longer siege – at least 20 months – if their deals proceed to Phase II investigations.

John Jenkins