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Full-Text Articles in Law
Deal Protection Devices, Albert H. Choi
Deal Protection Devices, Albert H. Choi
Articles
In mergers and acquisitions transactions, a buyer and a seller will often agree to contractual mechanisms (deal protection devices) to deter third parties from jumping the deal and to compensate a disappointed buyer. With the help of auction theory, this Article analyzes various deal protection devices, while focusing on the two most commonly used mechanisms: match rights and target termination fees. A match right gives the buyer a right to “match” a third party’s offer so as to prevent the third party from snatching the target away, while a termination fee compensates the buyer when a third party acquires the …
The Separation Of Voting And Control: The Role Of Contract In Corporate Governance, Gabriel V. Rauterberg
The Separation Of Voting And Control: The Role Of Contract In Corporate Governance, Gabriel V. Rauterberg
Articles
The default rules of corporate law make shareholders’ control rights a function of their voting power. Whether a director is elected or a merger is approved depends on how shareholders vote. Yet, in private corporations shareholders routinely alter their rights by contract. This phenomenon of shareholder agreements—contracts among the owners of a firm— has received far less attention than it deserves, mainly because detailed data about the actual contents of shareholder agreements has been lacking. Private companies disclose little, and shareholder agreements are thought to play a trivial or nonexistent role in public companies. I show that this is false—fifteen …
Rethinking Mac Clauses In The Time Of Akorn, Boston Scientific, And Covid-19, Samuel Shapiro
Rethinking Mac Clauses In The Time Of Akorn, Boston Scientific, And Covid-19, Samuel Shapiro
Michigan Business & Entrepreneurial Law Review
The MAC clause is perhaps the most important clause in contract law, giving acquirers the ability to terminate even the largest agreements in the face of an often vaguely defined “Material Adverse Change.” For decades, even though MAC clauses have been present in nearly every merger agreement, courts have almost universally refused to enforce them. But the Delaware Chancery Court’s 2018 decision in Akorn may finally change that. As the world deals with the economic uncertainty caused by COVID-19, courts may soon get more opportunities to decide whether or not they will follow Akorn’s lead and begin to allow …