Tuesday, September 8, 2009
Foulds, a clerk for Vice Chancellor Parsons, has a paper on conflicts of interest in stapled financing. Stapled financing is a practice in which the seller's advisor offers potential acquirors financing to undertake an acquisition. Of course this is a practice where there are serious potential conflicts of interest because in a competitive setting a seller's advisor has an incentive to favor a buyer who will take the financing over a buyer who won't. The Delaware Chancery Courts have looked warily at the practice and it's been the subject of some discussion by practitioners. Hey, I've even got stapled financing on my list of "to do" papers.