When negotiating investments in target companies, a private equity firm will almost assuredly attempt to negotiate the best possible deal for itself and its investors. Any professional that has been a part of such negotiations and transactions understands that in addition to the valuation of the target company and the size of the investment, private equity firms can negotiate director seats, board observer rights, dividends, warrant protection, management services agreements, the right to buy additional securities at a fixed price in the future, and redemption rights. A recent opinion by the Delaware Chancery Court, however, may force some private equity firms to give pause before using their clout over company management to “cash-in” on these negotiated terms. (more…)
Provisions designating the law governing contractual disputes are commonplace. However, designation of the governing law does not necessarily establish the jurisdiction within which the dispute must be decided. Parties who do not appreciate this distinction may be surprised that they cannot litigate their dispute in the jurisdiction they selected for the governing law. (more…)
Delaware recently revised its General Corporation Law (DGCL) to provide specific authority for Delaware corporations to use networks of electronic databases, including the nascent “blockchain” database technology, for the creation and maintenance of corporate records. (more…)
Early stage investing has seen a prolific form of capital raising enter the market over the last couple of years, called the “initial coin offering” or “initial token offering” (ICO). ICOs provide issuers with an alternative form of fundraising through the offering of tokens or coins that are virtual currencies or cryptocurrencies. In its simplest form, a company attracts investors looking to get in on the exploding returns in the cryptocurrency market by selling its own digital currency in an offering that looks a lot like crowdfunding. However, cryptocurrency has been headline news lately because of the high level of fraud in the market and the great volatility in value of such currencies.
In private mergers and acquisitions transactions in the United States, it has long been customary to exclude certain kinds of fraudulent conduct from negotiated limits of liability and exclusivity of legal remedies for losses arising out of the transaction, on the theory that the party that is defrauded should not be subject to such negotiated liability limits or be limited in its remedies. Traditionally, “fraud” was simply excluded from the coverage of the liability allocation provisions of the definitive agreement. More recently, however, parties have revisited this so called “fraud carve-out,” including the types of fraud and circumstances in which fraud should be excluded from a liability cap and who should be responsible for such uncapped liability. Without specificity, there is the potential for unintended consequences to the parties of converting claims that ostensibly are covered by the negotiated liability/remedy scheme into uncapped claims and the perceived unfairness of allocating that liability to investors not involved in the operations. The recent case of EMSI Acquisition Inc. v. Contrarian Funds, LLC, et al. is illustrative, particularly for transactions governed by Delaware law.
“Taking Care of Business” is a new blog from White and Williams’ Corporate and Securities Group. With the help of our friends in Cyber Law and Data Protection, Tax, Real Estate and Finance, Bankruptcy, Intellectual Property, Labor & Employment and Commercial Litigation, TCB will focus on emerging issues impacting the business community at every stage of the lifecycle from formation to growth and to exit. Whether it be important updates on day-to-day operational matters such as tax planning, employee benefits, commercial contracts, corporate finance, intellectual property, regulatory and data privacy and cybersecurity, or best practices and recent trends or legal developments of note applicable to transactional matters including acquisitions, strategic alliances, private equity and venture capital financings and debt financings, we’ve got you covered. And of course, we will keep you posted on any recent developments on the litigation and bankruptcy fronts too. In short, TCB will be a “one stop shop” for insights and commentary on everything relevant to owning and operating a business.
To give you a sense of the breadth of topics to be covered, today’s blog highlights five current legal issues that are on the minds of many of our clients. (more…)
- Navigating the Path to a Successful Exit
- US DOL Seeks to Clarify Fluctuating Workweek Pay Method
- Succession Planning and Transitioning Your Business Leadership to the Next Generation
- Culture Shock: When Two Culturally-Different Enterprises Combine
- The Long Arm of the Law Lengthens: What the U.S. ex rel. Medrano v. Diabetic Care RX, LLC Settlement Means for Private Equity Investors