Friday, February 15, 2013
According to this K&E client memo:
After a long period of dormancy, lock-ups – “crown jewel” or otherwise – have seen a recent creative rebirth with some structural twists. What remains clear is that, absent extreme circumstances (such as Bear Stearns), an old-fashioned “crown jewel” asset lock-up that serves only to end an auction by virtue of its preclusive impact on other bidders will be subject to significant judicial scrutiny under basic Revlon and Unocal principles. However, a small sampling of recent case law, coupled with developing market practice, suggest that in appropriate circumstances there may be room in the dealmaking toolkit for modern and creative variations on traditional lock-up arrangements (more so where there is demonstrable business benefit to one or both parties beyond the resulting deal protection). It goes without saying that these lock-ups, even in their modern iterations, must be handled with care with ample discussion and documentation of the reasoning and justification for their implementation.
Someone is about to learn this lesson the hard way. Don't use your inside information to trade in options. Why? I know it's a sure fire way to make a lot of money, quickly. But, you're also going to become the focus of an SEC investigation very quickly. Better yet, when you learn inside information from a client about a pending transaction, don't trade on it.
Wednesday, February 13, 2013
I'll admit to being disappointed by the work ethic of the plaintiff's bar -- so far only 6 complaints have been filed against the Dell transaction. My guess was 9. Six, though, is still above average. Steven Davidoff and Matt Cain have released their statistical compendium of transaction-related litigation for 2012 (SSRN: Takeover Litigation in 2012). This is the second iteration of this statistical compilation and it has quickly become a must read for those of us interested in the issue of transaction-related litigation.
We see the steady upwards trend in transaction-related litigation and how it has really exploded since 2005. Now, almost 92% of all transactions are accompanied by litigation of some sort and 50% of that involved multi-forum litigation. Davidoff and Cain also report median attorneys’ fees for settlements of $595,000 in 2012.