SEC Amends Best-Price Rule to Exempt Compensatory Arrangements
by John Gilluly and Diane H. Frankle
On November 1, 2006, the SEC issued Release No. 34-54684 in which the staff amended the tender offer best-price rule to exempt “employment compensation, severance, or other employment benefit arrangements” from the scope of the rule. The new amendments are intended to permit bidders to negotiate and enter into service-based, compensatory arrangements with security holders of a subject company without running afoul of the best-price rule. The new amendments also provide a non-exclusive safe harbor for such arrangements if approved by an independent committee of the board of directors of either the subject company or the bidder, if the bidder is party to the arrangement. Read the full article
Making the Deal Work
Challenges and Opportunities in Post-Merger Integration
by Michael S. Lebovitz
Global merger and acquisition activity has increased substantially over the last few years, and multinationals have continued to pursue M&A as a strategy to access markets and technology, improve margins, and reduce risks and threats to their medium to long-term futures. However, accounting and business consulting studies continue to observe that more than half of all mergers fail to achieve the goals of the transaction.
These studies cite unsuccessful post-merger integration as one of the most common factors leading to a failed merger. These studies also show that early integration planning and a disciplined approach to merger integration are the most important factors contributing to success. Given the increasing size and volume of M&A transactions and the larger premiums being paid in the market to secure a transaction, management’s investment in an M&A deal hinges on successful planning and implementation of the post-transaction structure.
Read the full article
Negotiating the Investment Banker Engagement Letter
by Christian Waage
Negotiating the investment banker’s engagement letter poses a challenging and delicate task for the attorney. At the start of a merger and acquisition transaction, the client will seek to engage an investment banker to advise and guide the process. The client will usually ask the attorney to review and assist in the negotiation of the terms of the investment banker’s engagement.
Because the investment banker will be working with the client for several months on a transaction, the engagement letter is really the start of a relationship that all parties hope will lead to a successful outcome. Additionally, over the course of a transaction, the lawyer will likely interact a great deal with the investment banker and its representatives. Therefore, negotiating the engagement letter sets the tone for this interaction. The lawyer’s goal should be to lay a foundation that will ensure an amicable and cooperative relationship going forward. Read the full article
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