September 19, 2009
Business and Tax Law Prof's Wanted - Boston College
BC is hiring! Here's the ad:
Boston College Law School expects to make faculty appointments in subject areas that are likely to include: business law (corporations, securities regulations, corporate finance, mergers and acquisitions, accounting for lawyers), tax law, and family law. The appointment will be for a tenure track position. Applicants must possess a J.D. degree and relevant experience such as practice at an advanced level, challenging government service, or a judicial clerkship. Applicants must show scholarly promise, evidenced by publications or works in progress. In addition, a focus on varying types of pedagogy, including skills and experiential training, is of interest. Boston College, a Jesuit, Catholic University, is an Affirmative Action and Equal Opportunity Employer and encourages all interested persons to apply.
Contact: Chair, Appointments Committee, Boston College Law School, 885 Centre Street, Newton, MA 02459. Deadline: November 1, 2009.
September 18, 2009
Media Ownership Rules Pop Up as an Issue
With the current state of the economy, creditors are being forced to think about taking equity positions in debtors. In most sectors that doesn't present a problem, but an article in today's WSJ points to the media sector where this is becoming a surprise issue for unwitting creditors who are taking equity. The FCC must approve these sales. While the 2006 ownership rules make cross-ownership and ownership of multiple platforms easier to accomplish, there's still an entire merge approval process at the FCC. Phil Weiser (formerly of U. Colorado, now of the U.S. Department of Justice Antitrust Division as deputy assistant attorney general for international, policy and appellate matters) has a nice paper that appeared last year in the Federal Communications Law Review on the challenges of the dual merger review regime (DOJ/FTC/FCC).
Post- Closing Purchase Price Adjustments
Agreements to purchase private companies often include a post-closing purchase price adjustment (generally based on closing working capital versus some agreed upon target). In an effort to ascertain current market practice, White & Case surveyed 87 private company purchase agreements that were publicly filed in 2008 and contained purchase price adjustments. Full report here.
Colbert on Corporate Speech
And here's the thing - he's right on Santa Clara County v Southern Pacific Railway! Hooray for smart corporate/constitutional comedy.
September 17, 2009
Gods at War
Steven Davidoff's book, Gods at War, will be coming out soon and is available for pre-order. The NY Times adapted a portion of it in today's paper here. In that selection The Deal Professor asks a relevant question: what the future of the deal will look like after the current dust settles. If you what to know more, you'll have to buy the book. Oh, I know this is a shameless plug, but it's my blog so sue me.
Be careful out there
Cautionary tales about catastrophic typos, due diligence errors and the like help focus the senses. Here’s one from Law Shucks:
One of the primary responsibilities of junior M&A associates in due diligence is to review material contracts for assignability and change-of-control provisions.
Should be simple, right?
Lawyers at Cravath and/or Cahill Gordon misinterpreted an assignment, and it led to a $115 million reduction in purchase price.
September 16, 2009
CVS Gets Another Look
A number of members of Congress and pressure groups have apparently started pushing the FTC to give the CVS/Caremark merger from two years ago another look. This reminds me of a question a student raised in my M&A class last year: does pre-merger clearance create some sort of safe harbor that removes all post-closing antitrust risk from a transaction?" The CVS/Caremark deal is a good reminder that the proper answer to that question is no. One should not mistake pre-merger clearance for an anti-trust "get out of jaill free" card. Although they don't go there very often, the FTC reserves the right to come back and examine the competitive (or anti-competitive) effects of mergers at any point in the future.
Laster Hearing Set
The Senate Executive Committee will meet to consider the nomination of Travis Laster at 1 p.m. hearing on September 22. At 4:00pm following the nomination hearings, the full Senate will be called into session, presumably to vote on the nominations. Now that's quick!
Update: Link to Senate Executive Committee.
Link to full Senate agenda for the 22nd.
September 14, 2009
Top-Up Option Math
Just going over some older posts, and I ran across The Deal Professor’s excellent post on top up options. I think it’s worth adding that if you’re going to counsel your clients that a top up option is “standard” in tender offers that you ask a junior associate for the cap table, first. It’s important to make sure the target has enough authorized stock so that it’s possible to grant the option. Although it doesn’t sound like a lot, in actuality the target will have to issue a lot of stock to move from say 88% to 90% and thus be in a position to conduct a short form merger.
I was surprised how far short of the statutory 80% Apax fell in its tender for Bankrate. If it’s true that they got just over 50%, then Bankrate had to have the printing presses working overtime to issue all the new stock required to get Apax over the 80% line (I know, I know, no stock certificates were actually printed…).
In Bankrate’s case that turned out not to be a problem. It had 100 million shares authorized, of which only 19,148,003 were issued and outstanding (see the cap rep). Assuming the tender closed with 50% tendering their shares (957,400 shares), then Bankrate would have to issue an additional 28.7 million shares to increase the buyer’s holdings from 50% to the 80% required (in Maryland) to conduct a short-form merger.* That’s a lot of stock. Prior to the tender, Bankrate only had 19 million shares outstanding. In order to get Apax in a position to conduct a short form merger, it would have to issue something like 150% of its outstanding shares. In Bankrate’s case they had plenty of authorized but unissued stock, but that may not always be the case, so it’s worth pulling out a calculator and checking.
Of course, in issuing such a large block of stock you’ll blow through listing standards that require stockholder votes (on issuances equal to >20% of outstanding shares). But, I suppose if you are taking a company private such things as listing standards don’t prevent much of an obstacle. I mean, what is the NYSE going to do? Delist you?
* Assuming that Apax received 50% of the outstanding shares in the tender, the math goes something like this:
(9,574,003 Apax tendered shares + 28,722,005 Apax option shares)/(19,148.003 old shares outstanding + 28,722,005 option shares) = 80.0%
Rakoff Rethinks Corporate Liability
"It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank's alleged misconduct now pay the penalty for that misconduct." So says Judge Rakoff.
Time to Rethink M&A?
"It's high time we stand back and completely revamp the basic terms of M&A papers, eliminating the boilerplate that is never relevant in the real world and advancing concepts that actually work when markets turn or expectations change. The technology for this -- reverse breakup fees, ticking fees, deposits and the like -- has been around for a while, but it is not used nearly as much as it should be or nearly as effectively as it could be." So says Robert Profusek over at The Deal.
September 13, 2009
Adams and Superfluous Recitals
Ken Adams -- name sound familiar? It should, because if you're like me a dog-eared copy of his Manual of Style for Contract Drafting sits on a shelf in your office -- anyway, he has a good post on his drafting blog with an annotatation of the superfluous recitals in the Marvel/Disney deal that is worth reading.
Business Law Prof Wanted - University of Florida
The University of Florida Fredric G. Levin College of Law seeks to fill up to three tenure track faculty positions. The anticipated starting date is the Fall Term of 2010. At this time, we anticipate needs in the following areas: Corporations/Business Organizations, Family Law, and International Business Transactions.
Both entry level and lateral candidates will be considered. Applicants for all of these positions should hold a J.D. or LL.B. degree from an accredited law school and have distinguished academic credentials, relevant legal experience, and a demonstrated commitment to outstanding research and scholarship. Rank and salary will be commensurate with qualifications and experience. Members of groups under represented in the legal profession including persons of color and women are particularly encouraged to apply. The University of Florida is responsive to the needs of dual-career couples.
To apply, go
Please include resume, transcript(s), and the names of three references. The University of Florida is an affirmative action/equal opportunity employer. If an accommodation due to a disability is needed to apply for this position, please call (352)392-4621 or TDD (352)392-7734.