Broken Deals: Who’s to Blame?

Posted by Holger Spamann, co-editor, Harvard Law School Corporate Governance Blog, on Wednesday November 19, 2008 at 12:13 pm
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Who’s to blame when a signed deal falls through? This question is especially relevant with respect to LBO buyers these days. Deals negotiated when times were good and credit was easy look much less appealing if not disastrous now that the short term economic outlook is bleak and the credit environment has soured. In particular, banks are weary of lending into LBOs when their ability to securitize and sell off the loans has waned. Private equity buyers may want to extricate themselves from signed deals, or be forced to do so because debt financing is not forthcoming. What contractual rights do sellers, buyers, and financiers have against one another in such a situation? What reputational effects, if any, constrain them from exercising those rights? And how should a seller’s board trade off deal certainty against price when choosing between competing transactions? Isaac Corré of Eton Park, Steven Davidoff a/k/a The Deal Professor, John Finley of Simpson Thacher, and Jim Morphy of Sullivan & Cromwell debated these questions with Vice Chancellor Leo Strine, Jr. and Professor Robert C. Clark in their Mergers, Acquisitions, and Split-Ups class here at Harvard Law School last week.
The video of the event is available here.

More Oversight for Private Players?

Hedge funds and private equity firms may come in for more regulatory oversight, if Senator Charles Schumer has his way.
The Deal.com noted that the New York Democrat, speaking at the Securities Industry and Financial Markets Association’s Summit on the Troubled Asset Relief Program Monday, predicts that any regulatory reform would include more oversight of private capital players such as hedge funds or buyout shops, whose failure could present a systemic threat.
“All market participants [regulated and unregulated] are linked as counterparties,” he said.
Go to Article from The Deal.com »

Middle-market tech deals getting done

Posted on November 4, 2008 at 10:39 AM, The Deal.com:
M&A activity slowed considerably over the past three months, and most analysts we've talked with, including Booz & Co.'s Gerald Adolph and Cravath, Swaine & Moore's Jim Woolery, expect more slowing through the end of the year. But our colleague Alain Sherter over at Tech Confidential reports Tuesday on one industry segment that's maintaining respectable levels of M&A: the middle-market technology sector.Referencing a report from the boutique investment bank TM Capital, Sherter writes that:
Providers of enterprise application software, infrastructure management tools and information technology services saw 439 deals in the third quarter, roughly level with deal activity in the previous quarter and slightly ahead of totals in the year-ago period.The total value of tech deals, however, is off from last year, as strategic acquirers focus on smaller deals. - Suzanne Stevens