Contractual Indemnity in M&A Deals: Transactional and Litigation Considerations, Terms to Minimize Financial Risks
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Commercial Law
- event Date
Wednesday, April 3, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will guide M&A counsel in negotiating and drafting indemnification provisions in merger documents, asset purchase agreements, and stock purchase agreements. The panel will discuss best practices for addressing challenges that may arise with indemnification claims, explain the various theories of measuring damages for breach, and examine how insurance products interact with indemnification provisions.
Ms. Kao advises clients on corporate matters, focusing on cross-border and domestic mergers and acquisitions for public and private companies, venture capital investments, as well as joint ventures and restructurings. She also provides general corporate counseling regarding corporate governance and post-acquisition integration matters. In her practice, she has represented clients and investors across a variety of industries, including healthcare, biotech, technology, media, software and specialty chemicals.
Ms. Keeley advises U.S. and multinational companies on corporate transactional and corporate governance matters. She has significant experience in mergers and acquisitions and other business combinations, dispositions and divestitures, joint ventures, partnership and strategic alliances, private equity transactions, complex commercial transactions, and REITs. In addition to negotiating deals, Ms. Keeley regularly counsels companies and their boards on corporate governance, SEC disclosure, and related compliance matters. She has represented public and private companies in a variety of sectors, including real estate, technology, industrials, energy, aerospace and defense, and healthcare.
Indemnification provisions are standard clauses in M&A contracts that help parties minimize financial loss if a deal goes south. Counsel negotiating indemnification terms must consider time, subject matter, dollar limitations, escrowed funds, setoff rights, and indemnification payment. The risks of boilerplate provisions far offset the convenience.
Indemnity clauses are challenging to negotiate. The seller usually seeks to limit its indemnification liability while the buyer wants as much indemnification protection as possible.
Deal counsel must ensure that the indemnity provisions clearly describe the appropriate coverages and limitations and are properly coordinated with other agreement provisions. Deal counsel must also make sure that the indemnity provisions are enforceable against the seller's stockholders.
Counsel should also consider how damages will be determined in the event of a breach. Further, deal attorneys should evaluate and advise their clients on the benefits but also the shortfalls with respect to purchasing insurance products to supplement or replace indemnity provisions.
Listen as our authoritative panel of deal attorneys explains current trends in negotiating indemnification provisions in M&A contracts. The panel will discuss strategies for limiting or expanding indemnification liability and enforcing indemnity clauses, including determining damages. The panel will also explain how insurance products are being used to cover indemnities.
- Negotiating indemnification provisions
- Types of damages covered
- Caps, baskets, and other limitations
- Fraud exclusion
- Purchase price adjustment and double-dipping
- Defense of third-party claims
- Enforceability of indemnification obligations against non-signatories
- Evaluating and addressing creditworthiness of indemnitors
- Determining types of damages recoverable under indemnification provisions in the event of a breach
- The use of insurance products to cover indemnities
The panel will review these and other key issues:
- What are the current trends in drafting and negotiating contractual indemnity provisions?
- What are the most commonly disputed issues in M&A indemnity, and what are some practical strategies for resolving them?
- How can counsel for buyers expand indemnification protection and counsel for sellers limit indemnification liability when drafting and negotiating indemnity clauses?
- How are damages for a breach measured under indemnification provisions?
- How do insurance products impact indemnification provisions?
