Current Influences on Transaction Environment
In today’s complicated risk environment, there are a variety of transaction influences.
- Increasing litigation trends, with more money at stake in an unstable and complex financial landscape
- Interpretation of Material Adverse Change (MAC) clauses and ability of sellers to force specific performance by buyers
- Reverse Break-up Fees changing the dynamics of deals
- Recent cases in the private equity arena suggest greater potential for disputes between private equity forms and bankruptcy trustees, law firms, limited partners, and general partner
- Governing law and Choice of Court provisions (ramifications can be greater if the laws or procedures of different countries are involved, let alone different state within the U.S.)
- Advent of collective litigation (class actions) in Europe
- Reform of civil law in certain European countries (e.g. France) to introduce punitive damages as a civil remedy
- Increased entry prices for private equity transactions, increasing the risk of over-paying for deals
- Increased litigation in the U.S. of international controversies—possibility of non-U.S. plaintiffs to use U.S. courts to recover treble damages
- Increased effort by U.S. and foreign regulatory agencies to coordinate enforcement proceedings in multiple countries
- Signs of a future slowdown in credit growth/ tightening of credit markets in Western Europe are following the same phenomenon in the U.S.
- Regulatory and compliance risk represents the greatest strategic challenge facing leading global businesses in 2008