M&A’ Red Flags for the United States #2

Agreements for the acquisition of a business commonly contain “material adverse change” provisions, which operate to allow the buyer to “walk away” from the transaction if there is a “material adverse change” in the business being acquired. But be aware that U.S. courts will not always construe commonly used legal terminology in a manner consistent with the expectations of the parties. Thus, do not just rely on generic “boilerplate” wording, take the time to draft specific language tailored to address the particular concerns of the parties.

See also in this blog article May 3, 2010 and article Feb 1, 2010.

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