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Does anyone want to be my M&A coach? Will pay.
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This is incomplete and pretty M&A focused but somewhat applicable in other situations. Here goes:
1. Identify who you represent and pay attention to how each provision either benefits your client or the opposing party;
2. Check for formatting, definitions (both that all defined terms are used and all capitalized terms are defined);
3. Review any representations and warranties both for accuracy and potential qualifiers (materiality, knowledge, MAE, schedule exceptions, etc);
4. Review indemnity, particularly in an M&A context, paying special attention to caps, baskets, mutuality (or lack thereof), materiality scrapes, and survivability, particularly with fundamental vs non-fundamental reps;
5. Review and consider governing law, venue, and/or arbitration;
6. If arbitration is mandatory pay very close attention to the terms, including who is doing the arbitration, if amount in controversy thresholds apply, how arbitrators are selected, what types of claims are covered, are state law procedures used for any component (i.e., discovery procedures);
7. Review covenants, including non solicit, non compete, cooperation, etc; and
8. In the event of a sign and subsequent close transaction, review the termination mechanics, penalties, etc.
This is a very rough and clumsy list (it’s 9pm on Saturday, sorry) but should be at least a starting point. If in doubt on the substance of how various provisions or mechanics work, the drafting notes on practical law are a great starting point.
Certainly, happy to help.
Trick is to find something that’s good for the other party but could be written in a different way. Is the other party saying “we’ll indemnify you for (x) if the loss is material”? Then cross out “if the loss is material” and write in “if damages exceed [XYZ]”. As you progress, track all the possible formulations you see for clauses. Keep a list. Use that to build out your process for leaving comments.
Yup, particularly if in an M&A transaction. For example, if buy-side you’ll never want materiality qualifiers and a hard-coded threshold for damages (basket) like you mentioned. The basket IS your materiality qualifier and I see way too many people miss this.
Most of the stuff you’re looking for will be industry-specific so hard to give a general answer.
But as you progress, you learn in the following stages:
1) what the provisions mean (in English)
2) what their commercial & legal purposes are
3) which ones actually get negotiated, and their common variants (and common mistakes)
4) eventually, specific legal/historical evolutions of the provisions (eg, major court cases, changes in law/regulation/industry)
This is why it’s such a good idea to keep a personal commentary document of each important provision that you update over time. You’ll be amazed how sophisticated it gets in a short period of time and constantly refer back to it throughout your career, and the more you use it the better it gets. Personally I like OneNote for this but everyone has their own preferences.
Whatever works best for you. There’s probably a bunch of ways you can do it.
I have a different page for each relevant provision, and a table with columns for matter/date, context, change sought and rationale, and final answer and rationale.