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Delaware Once More Rejects a Buyer's Efforts to Invoke an MAE Clause | Weil, Gotshal & Manges LLP


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On July 9, 2021, the Delaware Court of Chancery issued its latest decision determining whether a buyer’s attempted invocation of a Material Adverse Effect (MAE) clause was effective to excuse the buyer’s failure to close an acquisition of the target company pursuant to a signed merger agreement. While the court relied upon well-trodden paths in reaching its determination that no MAE had in fact occurred, there are a few takeaways worthy of note i.e., (a) the seemingly “unknown event” element of
IBP, Inc.’s theoretical underpinnings to the purpose of an MAE clause generally, is not a built-in requirement to invoking an otherwise carefully defined MAE clause, (b) durational significance remains a key ingredient in determining whether an material adverse effect has occurred, (c) carve-outs can eliminate otherwise truly material adverse effects from constituting an MAE and (d) the effectiveness of “dispr ....

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Delaware Declares That Deliberate Fraud Is Indeed Something Completely Different than Reckless Fraud | Weil, Gotshal & Manges LLP


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By now we should all be well-schooled in the various types and sources of fraud claims, as well as the dangers of undefined fraud carve-outs to the sell-side in an M&A transaction governed by Delaware law. But a recent decision by the Delaware Supreme Court,
Express Scripts, Inc. v. Bracket Holdings Corp., 2021 WL 752744 (Del. Feb. 23, 2021), provides an opportunity to reaffirm that prior schooling and ensure, for the sell-side, that fraud carve-outs only encompass deliberate lying by the seller itself respecting the negotiated contractual representations set forth in the written acquisition agreement. ....

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Determining the Fair Market Value of Shares—"Unintended Mischief" from Marketability and Minority Discounts | Weil, Gotshal & Manges LLP


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Distinguishing between an entity and the ownership of equity in that entity is not difficult. But it is surprising how often those two distinct concepts become conflated or obscured in the drafting of commercial agreements. Thus, in a New York case involving the interpretation of a prenuptial agreement, a spouse was denied a share of the proceeds of the sale of stock owned by her ex
in a company because the agreement, as drafted, specified that she was only entitled to a share of the proceeds from a sale ....

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