Private Company Sales in the U.S. and ... - Redcliffe Training

The Banking and Corporate Finance Training Specialist

Private Company Sales in the

U.S. and U.K.

A comparison of the law, customs and practice

This course can also be presented in-house for your company or via live on-line webinar

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Course Overview

Participants will: Explore the key basic differences between private company sales in the U.S and U.K

Contrast exclusivity agreements with “No shop No talk”. Be taught about heads of agreement in the different jurisdictions

Master the issues relating to representations, warranties and indemnities – U.S. vs English law

Understand in detail the limitations on liability in the US and the UK

Be appraised on the differences in rules and practices relating to disclosure Understand split signing, completion conditions and MAC/MAE clauses in the US and

UK

General matters U.S. is a Federal system – so different states have different approaches

The Big Three - NY law, Delaware, California

Terminology - key differences Formalities – key differences

General principles of interpretation U.S. law English law

European law What types of Efforts/ Endeavours

English law (review of relevant case law) NY law (review of relevant case law) California

Impact on the deal Negligence

English law - Gross negligence and willful misconduct NY law – ordinary & gross negligence and willful misconduct Duty to negotiate in good faith (review of relevant cases)

English law NY law

European approach Damages & Liquidated damages & Penalty clauses

English law approach Historical position Cavendish Square case

Lessons and implications from Cavendish Square NY law approach

Approach to CPs – English law vs NY Passage of risk - – English law vs NY

Exclusivity Agreements vs No shop No talk

U.K. approach – Exclusivity agreements generally U.S. approach

No Shop No Talk Gemini vs Ameripark – Lessons from the case

Heads of Agreement

Course Objectives

Course Content


+44 (0)20 7387 4484

English law Key requirements The “essential” terms

The “subject to contract” trap NY law

Type 1 – the 4 key factors per Vacold v Cerami Type 2 – the 5 key factors

California law Key requirements

Delaware law

Summary of current position Lessons from the SIGA case

How to avoid the pitfalls Representations

General difference between English law vs U.S. (NY) approach re “representations and warranties”

Representations in English law Representations in U.S. (is it that different?)

Non-contractual representations and waiver of liability for fraud - three key clauses

Entire Agreement Non-reliance

Exclusive remedies Approach under English law & key cases (e.g. Witter, Grimstead) Position in NY (Danann and Grumman cases)

Position in Delaware (ABRY case)

Warranties & Indemnities – U.S. vs English law Scope of Representations & Warranties generally - U.S. vs U.K. Quantification of damages for breach of warranty/representation

Buyer’s Knowledge & materiality Materiality “scrapes” (U.S.)

Defined Application Ramifications

Seller v Buyer arguments Potential liability – FSA vs Rule 10b-5 (Securities Exchange Act)

Key aspects for Rule 10b-5 Indemnities

Approach in England

Approach in U.S.

Limitations on liability UK approach

Value as is and value as warranted Warranty insurance

U.S. approach

Great use of Escrow: key negotiation issues for the parties Four potential problem areas (U.S.) – FBAR Regs., Definitions, HYC, Domicile

Procedures for release of funds


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How many escrow accounts

Dispute Resolution – U.K. vs U.S. Disclosure - Practice in U.S vs UK

General differences in approach to due diligence General vs Specific disclosures

Disclosure bundle and disclosure of the data room Scope of specific disclosures - effectively disclosed against ALL warranties, cross-

referencing

Disclosure qualifies all vs specific warranties Buyer’s knowledge

Standard in England vs U.S. approach Sandbagging and Anti-sandbagging

Three approaches U.S. case law U.K. approach and case law

Split Signing / Completion MAC/MAE clauses

Completion conditions generally – U.S. vs U.K. Financing conditions generally

U.K.

U.S. SunGard issues - “Typical” requirements Other aspects – reverse transaction fees, specific performance

Repetition of warranties/representations at Financial close / Completion Different approaches in the U.S. - warranties true “in all material respects” or MAC

standard

Approach in U.K. MAC/MAE clauses

Position in U.K. Position in U.S. generally

Different approaches - part of “Termination” clause vs Stand-alone clause

Review of U.S. MAC clauses Position in Delaware (review of cases)

Position in NY (review of Inkeepers Trust case) Other matters Stockholder Representative Agreements

Hart-Scott-Rodino

Oscar Wilde is reputed to have said “England and America are two countries separated by the same language”. The same could be said of the differences in the M&A process. This

course contrasts the market-based customs and practices of U.S. and U.K. custom with respect to the M&A process and some of the key legal differences in relation to the sale and purchase of shares of private companies together with some references to related

agreements. Whilst the practices and customs that apply to U.S. deals are largely the same across the Continental U.S. (and Canada to some extent), the U.S. is a federal system and

there are differences in law and practice between the various states. In this context, references to U.S. law largely refer to New York law, and (where relevant) to Delaware law

with some references to Californian law.

Course Overview


+44 (0)20 7387 4484

Globalization and the influence of the European Union means that, despite civil law dominating Europe, many of the practices and customs in relation to M&A are broadly

similar in the U.K. and Europe law, so reference is made to civil law systems where these differ from English law (e.g. re duty to negotiate in good faith)

The programme does not attempt to offer a linear approach and contrast all the key differences in all customs and practices (e.g. Locked Box remains much rarer in the U.S.

than Europe), but simply those where law and practice differs significantly.

This course was originally developed for a U.S. investment bank looking to provide their staff with a sound basis on the legal aspects as well as the commercial customs in M&A deals in the U.S. and Europe. In this context it will appeal to lawyers, corporate finance

advisors, bankers, accountants and corporates looking in M&A or related activities.

Redcliffe Training has provided in-house training for the following companies:


+44 (0)20 7387 4484

Tailored Learning

All of our training courses can be tailored to suit your company’s exact training needs.

We will work closely with you to help develop a training programme with content that is unique for your organisation.

Please email us on [email protected] for more information

E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact

requirements.

mailto:[email protected]

Documents

Private Company Sales in the U.S. and ... - Redcliffe Training