Cooley M&A Insight From Q4 2018
M&A blog: Q4 2018 recap
In spite of a general environment of political and economic uncertainty and a daily sprinkling of stock market volatility, trade wars, sanctions, the US government shutdown disrupting the market for IPOs, Brexit uncertainty, natural disasters and various other crises, cross-border M&A activity momentum continues.
MAEjor Ruling: Delaware Court of Chancery Finds Target Suffers Material Adverse Effect and Acquirer Could Back Out of Transaction
M&A practitioners have long advised boards of directors that the Delaware courts have never found that the events or circumstances in a particular transaction met the contractual standard of having a material adverse effect (or MAE) as defined in a merger or acquisition agreement. Therefore, the board should have a high degree of confidence in deal certainty.
The two legal systems that most often govern cross-border private M&A transactions are US (most commonly Delaware) law and English law. To the untrained eye, acquisition and sale agreements governed under either system may appear very similar, and differences are classified as "form over substance." There are, however, a handful of material differences in approach and legal ramifications that affect corporate transaction structuring and liability exposure that seasoned M&A practitioners should be familiar with.
On October 10, 2018, the US Department of the Treasury issued a set of interim regulations for a pilot program implementing certain provisions of the Foreign Investment Risk Review Modernization Act of 2018, which President Trump signed into law August 13, 2018.