We all have been there. The parties have reached agreement on all of the principal terms. Signature pages for all of the definitive transaction documents are being held in escrow. The treasury department has entered all of the wire information and the purchaser is ready to wire. All of the closing conditions have been satisfied and the parties are ready to consummate their deal, with one glaring exception— obtaining a third party consent to a contract that is material to the target’s business.
Meso Scale I. Considering all of the effort that is exerted in negotiating a complicated M&A transaction, it can be frustrating for all parties to the transaction when the closing hinges on the availability of a landlord or the internal approval process of a large organization. Indeed, with difficult-to-assign contracts crucial to a target's business, M&A professionals routinely structure around the third party consent dilemma through stock acquisitions or by utilizing a reverse triangular merger structure. Accordingly, in 2011, when Vice Chancellor Parsons of the Delaware Chancery Court rendered a memorandum opinion in Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 2011 WL 1348438 (Del. Ch. Apr. 8, 2011) (“Meso Scale I”) that suggested that a transaction structured as a reverse triangular merger may constitute “an assignment by operation of law” under Delaware law, it raised eyebrows in M&A circles and created concerns that the universe of contracts subject to third party consent in a reverse triangular merger context just increased exponentially. The disposition of Meso Scale I, however, did not require Vice Chancellor Parsons to make a definitive ruling on this point, which left M&A practitioners in limbo as to whether the following type of anti-assignment provision would trigger a consent requirement in a transaction structured as a reverse triangular merger...
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