News & Analysis as of

Earn-Outs

Acquisition Financing in the United States: 2017… Uncertainty!

by Morrison & Foerster LLP on

Global M&A was sluggish in the beginning of 2016, but ended strong with a fourth quarter burst of activity. While aggregate 2016 deal volumes dropped 16% from the highs of 2015, Thomson Reuters reports that 2016 global deal...more

2017 M&A Report

by WilmerHale on

In 2016, the number of reported M&A transactions worldwide dipped by 2%, from a record 34,838 deals in 2015 to 34,191, but still represented the second highest annual tally since 2000. Worldwide M&A deal value decreased 16%,...more

Earn-Outs in M&A Transactions: Red Flag Issues that Government Contractors Should Avoid

by PilieroMazza PLLC on

Government contractors who wish to grow by purchasing an existing business are aware of one simple truth: The value of the target is linked directly to its ability to transfer its existing contracts. If there is a high risk...more

Global Private Equity Newsletter - Spring 2017 Edition: Bridging the Consideration Gap

by Dechert LLP on

As recently as March 15, 2017 (Financial Times), KPMG explained that total market capacity for M&A will increase by 17% in 2017 as companies continue to pay down debt and bolster cash reserves. As a result, sell-side...more

Blog: Federal Court Gives Teeth to Operational Efforts Covenant in Sanofi/Genzyme Earn-Out Dispute

by Cooley LLP on

We keep a close eye on developing cases regarding earn-outs and contingent payment rights in light of the prevalent use of these arrangements in life sciences deals and their increasing use in non-life sciences deals. On...more

Earn-out Pitfalls for Business Owners

by Davis Wright Tremaine LLP on

Recently, a couple of business owners received an offer to buy their company. The potential buyer proposed paying 25% of the Company’s value in cash up front and paying the remaining 75% over time, contingent on certain...more

Blog: Private Market Trends Snapshot 2016

by Cooley LLP on

M&A deal terms will almost always vary based on the specific context of the transaction, including the deal price, structure and each party’s negotiating leverage. Although no amount of data can replace context-specific...more

M&A Team News - January 2016

by Cooley LLP on

Here is a look back at the top M&A developments that affected deal-making last year and a look forward to our expectations for 2016....more

Bridging the Bid-Ask Spread in the Oil Patch

Hope on the sell side and price volatility led to a wide bid-ask spread in 2015 and resulted in fewer financial sponsor-backed mergers and acquisitions transactions in the oil patch. Of late, prices have further plunged,...more

Taxing the Earnout

by Smith Anderson on

Agreements for the sale of privately-held companies often call for part of the purchase price to be paid in the form of an earnout. The earnout provision requires the buyer to pay an additional amount in purchase price after...more

What's Market? Update: Delaware Corporate and M&A

by Goulston & Storrs PC on

Fee Shifting and Forum Selection Clauses - Much attention has been paid to Delaware legislative developments regarding fee shifting and forum selection clauses. On June 24, 2015, Delaware Governor Jack Markell signed...more

Making the Most of Earn-outs

by Latham & Watkins LLP on

Earn-outs, where additional consideration is paid post-completion based on the performance of a target business, are becoming increasingly common in private M&A transactions. Our recent survey of European deals between July...more

Securities and Corporate Governance Litigation Quarterly

by Seyfarth Shaw LLP on

Welcome to the fourth issue of Securities and Corporate Governance Litigation Quarterly, Seyfarth’s quarterly publication of the Securities & Financial Litigation Group focusing on decisions or other items of interest for...more

The Ropes Recap: Mergers & Acquisitions Law News - Second Quarter 2015

by Ropes & Gray LLP on

News from the Courts - Delaware Chancery Court Finds That Dispute Over Accounting Methodology Is Subject to Arbitration Procedures - Post-closing purchase price and working capital adjustments are common in...more

The Rewards of Crafting Explicit Earn-Out Provisions

Those of us involved in drafting M&A agreements spend a considerable amount of time vigilantly and artfully drafting certain contractual provisions to protect our client and ensure that our client receives the maximum rights...more

Australia Tax Alert: Exposure Draft On Tax Treatment Of Earnouts

by DLA Piper on

The Government Has Released The Long Awaited Exposure Draft With Changes To The Tax Treatment Of Earnout Arrangements. It Is Common For The Buyers And Sellers Of A Business To Include Provisions Which Either Increase Or...more

Obligations Under Earn-Outs Are Limited to What the Words Say

The stockholders of Cyveillance, Inc., sold their company for $40 million up-front and a $40 million earn-out if the company’s revenues reached a certain level. Section 5.4 of the merger agreement prohibited the buyer from...more

The Ropes Recap: Mergers & Acquisitions Law News - First Quarter 2015

by Ropes & Gray LLP on

In this issue: - News from the Courts - Chancery Court Denies Enforcement of Drag-Along Right in Transaction Where Notice to Minority Stockholders Improperly Provided After Majority Stockholder Approval...more

Tech Industry Bulletin

by Buchalter on

In this Bulletin: - Intellectual Property: Guidance to the Upstart Tech Company for Protecting IP Rights - Mergers & Acquisitions: Five Legal Issues Entrepreneurs Should Consider Before Agreeing To an Earn-Out...more

Delaware Court Examines Implied Covenant of Good Faith Related to Earn-Out

In Fortis Advisors LLC, as the equity representative v. Dialog Semiconductor PLC, the Delaware Court of Chancery examined the implied covenant of good faith in the context of an earn-out provision included in a merger...more

Another Look at U.S. Federal Income Tax Treatment of Contingent Earnout Payments

by Fenwick & West LLP on

The sale of a company in an M&A transaction often involves consideration to the selling shareholders that is deferred and contingent on subsequent events in the life of the company, such as the post-acquisition performance of...more

Delaware Court Allows Claims For Breach Of Implied Good Faith Covenant In Earn-Out Case

A recent Delaware Chancery Court opinion in American Capital Acquisition Partners, LLC, et. al. v. LPL Holdings, Inc., et.al. held that a seller’s claim that its buyer diverted opportunities from the acquired business to a...more

Delaware Cases: Good Faith, Non-Reliance and Fiduciary Duties

Last week, in American Capital Acquisition Partners, LLC v. LPL Holdings, Inc. (February 3, 2014), the Delaware Court of Chancery, in connection with a disputed earnout provision, allowed a claim for breach of the implied...more

ABA’s 2013 Private Target Mergers & Acquisitions Deal Points Study: Financial Deal Points

Recently, the 2013 Private Target Mergers & Acquisitions Deal Points Study was finalized by the M&A Market Trends Subcommittee of the Mergers & Acquisitions Committee of the American Bar Association. This bi-annual study,...more

Delaware Supreme Court applies ‘reasonable conceivability’ standard and addresses earn-out and indemnification provisions

Last month, in Winshall v. Viacom International, the Delaware Supreme Court applied the “reasonable conceivability” standard to a motion to dismiss and addressed the earn-out and indemnification provisions in a merger...more

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