Financial Projection Disclosure Requirements in M&A Deals: Preparing, Using and Disclosing Projections

Financial projections prepared by management and approved by the board of directors are typically a key element considered by a board of directors in evaluating transformative M&A transactions, not least because they underpin the fairness opinion delivered by a financial advisor to the board of directors. If a company’s stockholders will vote on the transaction (e.g., if the company is selling itself or if the company is a buyer and is issuing a number of shares that exceed stock exchange requirements for stockholder approval), these projections are often summarized in the proxy statement sent to stockholders pursuant to state corporate law and federal securities law.

Attorneys that understand the current views of courts and the SEC staff on the use and disclosure of projections at the outset of a transaction are better equipped to help guide clients through the unique projection disclosure issues that can arise during the course of an M&A transction. Missteps in this area can impair a company’s efforts to build a strong record and can in turn increase directors’ and officers’ exposure to fiduciary duty breach claims in stockholder litigation that often arises in M&A transactions.

Listen as our panel of M&A attorneys discusses best practices for preparing, using and disclosing financial projections in M&A deals, highlighting recent key legal developments.

1. Use of Financial Projections in M&A
   1. Initial Preparation
   2. Multiple Sets of Projections
   3. Updates to Projections
   4. Review and Reliance
2. Disclosure requirements under Delaware law and federal securities laws
   1. Of financial projections
   2. Of financial analyses
3. Best practices for preparing, using and disclosing financial projections

The panel will review these and other key issues:

• How are Delaware courts ruling in cases involving the disclosure of financial projections in the context of M&A transactions?
• What are some best practices for preparing and using financial projections in M&A deals?
• Which financial projections should be disclosed when multiple sets of projections have been prepared?