Broken Deal Litigation: Practical Considerations for Buyers and Sellers

Acquisition documents tightly define when a buyer or seller may be released from their obligation to close a deal, how that right is exercised, and what happens as a result. In litigation, both the terms of the contracts and the parties' actions will be scrutinized and reinterpreted by the courts. One of the first decisions is whether to engage the deal attorneys to litigate it.

If the seller attempts to leave the deal, the buyer often files suit for breach of contract and seeking specific performance and/or damages. Buyers must be prepared to have their reasons tested: "material adverse" condition or event (MAC or MAE), the seller's alleged material misrepresentations, the seller's failure to continue to operate in the ordinary course of business, failure of a "hell or high water" clause, failure of financing contingencies, and more. The seller will need to demonstrate why specific performance is warranted.

Counsel need a plan of action from the beginning because these cases can proceed at lightning pace due to timing issues or to increase litigation pressure. Failed mergers often result in the exit of executives and key employees. A wide range of experts will need to be selected, depending on the nature of the claims asserted, to opine on the value of the target business, the present and future economic condition of the relevant industries, industry customs and practices, deal standards, corporate finance, fiduciary duties, privilege, and more. Opposing experts may have to be deposed.

Listen as the panel of broken deal litigators reviews the key issues and offers practical ways to navigate such issues as materiality, ordinary course operations, which experts may be needed for specific issues, and recent cases.

I. Reasons parties may seek to terminate a deal

II. Pre-litigation planning and resolution strategies

III. Jurisdiction and standing

IV. Claims and burdens of proof

V. Defenses and affirmative defense

VI. Discovery and experts

VII. Practical considerations for sellers

VIII. Practical considerations for buyers

The panel will review these and other important issues: 

• What is the standard of materiality in MAC/MAE clauses?
• What factors do courts consider when determining whether a party is entitled to specific performance?
• What are damages for an inappropriately terminated deal?