Earnout provisions in acquisition agreements can be a useful tool in bridging the valuation gap by deferring portions of the purchase price until certain post-closing milestones are achieved, and they are particularly common in developmental-stage pharmaceutical transactions. Practitioners should take
Cleary Securities, Disclosure, and Governance Watch
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District Court Holds Missouri’s “Anti-ESG” Rules are Preempted by Federal Law, Violate First Amendment, and are Unconstitutionally Vague[1]
On August 14, 2024, the U.S. District Court for the Western District of Missouri (the “District Court”) issued a decision ordering a permanent injunction against rules promulgated by the Missouri Securities Division, colloquially referred to as Missouri’s “Anti-ESG” Rules, requiring…
Delaware Chancery Court Finds Private Equity Sponsor’s Tax Receivable Agreement Potentially Led to Conflicted Sale Process
In a May 31, 2024 opinion, the Delaware Court of Chancery denied a motion to dismiss a complaint challenging the sale of a public company with a controlling private equity sponsor to an unrelated, arms-length buyer, finding that the sale…
Delaware Supreme Court Provides Important Guidance on Application of MFW Framework to Controlling Stockholder Transactions
On April 4, 2024, the Delaware Supreme Court issued its decision on a stockholder suit challenging the fairness of IAC/InterActiveCorp’s separation from its controlled subsidiary, Match Group, Inc.[1] In this decision, the Delaware Supreme Court provided clarity and guidance…
SEC’s Final Climate-Related Disclosure Rules: A Closer Look at the Climate Note to Audited Financial Statements
On March 6, 2024, the U.S. Securities and Exchange Commission approved in a 3-2 vote final rules that require most reporting companies to provide certain climate-related information in their registration statements and annual reports filed with the SEC. This memorandum…
Update on the Corporate Sustainability Due Diligence Directive
On Friday, March 15, 2024, the Council of the European Union reached an agreement on a final version of the Corporate Sustainability Due Diligence Directive (“CS3D”). The vote on an earlier version of the CS3D had been postponed several times…
Raw Deal: Seller Ordered to Pay Buyer Over Twice the Purchase Price in Post-Closing Purchase Price Adjustment Dispute
In a February 28, 2024 opinion, the Delaware Court of Chancery confirmed an arbitrator’s award resulting in a seller of a $40 million company unexpectedly having to pay a buyer over twice that amount – $87 million – in a…
Delaware Court of Chancery Invalidates Common Provisions in Stockholder Agreements
With a stroke of the pen, the Delaware Court of Chancery invalidated commonplace provisions in scores of stockholder agreements relating to public corporations and likely many more relating to private corporations. In West Palm Beach Firefighters’ Pension Fund v. Moelis…
FRC publishes updated UK Corporate Governance Code and Guidance
The Financial Reporting Council (FRC) has published an updated UK Corporate Governance Code (the Code), most of which will take effect from 1 January 2025. These revisions will replace the current version of the Code published in 2018. …
It’s Not DE, It’s You: 55 Billion Reasons Tesla is Not ‘Your Company’
On January 30, 2024, the Delaware Court of Chancery struck down Tesla CEO Elon Musk’s $55 billion performance-based stock option package, ruling that Tesla’s directors did not satisfy the stringent “entire fairness” standard in approving his compensation. This case comes…