Strategic Buyer/Public Target Deal Points Study

The Committee on Negotiated Acquisitions of the American Bar Association’s Section of Business Law recently released the 2007 Strategic Buyer/Public Target M&A Deal Points Study. I am the Chair of the Committee’s M&A Market Trends Subcommittee, which compiled the Study.

The Study examines key deal points in acquisitions of publicly traded companies by strategic buyers announced in 2005 and 2006. Among the many interesting findings of the Study is that almost 50% of the acquisition agreements in the sample contained provisions precluding the Board of Directors from changing its recommendation in favor of the acquisition absent a topping bid. (Those provisions are described on pages 47 and 48 of the Study.) This would seem to cut against the views of many practitioners (supported, to some extent, by language in Chancery’s 2005 decision in Frontier Oil v. Holly Corp., as well as comments made publicly in early 2006 by a leading Delaware jurist) that such a limitation could violate the fiduciary duties of the Board of Directors under Delaware law.

My colleague, Rick Climan, former Chair of the Committee on Negotiated Acquisitions, acted as special advisor on this project. Wilson Chu and Larry Glasgow, the former Co-Chairs of the M&A Market Trends Subcommittee, and more than 20 M&A lawyers from major law firms across North America, assisted in its compilation.

The full Study is available for download here.