7 Pages Posted: 7 Jul 2009
Date Written: 2008
For deal lawyers, 2007 was an interesting year. The two prior years produced a record number of acquisitions by private equity firms, and 2007 initially appeared to be following suit. But the credit market tightened and the stock market softened in the latter part of 2007, putting a crimp in the smooth closing of many of the deals signed earlier in the year. Buyers grappled with buyer’s remorse, lenders rethought their willingness and ability to finance various deals, and sellers were forced to closely examine what – if any – leverage they had to close the deals they signed in more certain times. Skittish buyers and sponsors tried to escape their deal obligations by invoking the material adverse change (MAC) clauses and reverse termination fee provisions in their merger agreements. In response, sellers attempted to secure their buyers by arguing that MAC provisions were not implicated by the circumstances at hand, and specific performance was required. The resulting jousting, maneuvering, litigation, settlements, and fall-out has provided a stream of learning opportunities for deal lawyers, bankers, and business people alike.
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