The New York Times DealBook scored a coup when it landed Prof. Steven Davidoff to write “The Deal Professor.”
This good professor is certainly prolific, and his entry of this past Monday really caught my eye. Entitled “Is M&A Dead?“, quite a few private equity deals gone sideways are explored, deal point by deal point. A few examples:
* Reasonable Best Efforts Clause: The Alliance Data Services litigation has highlighted the legal ambiguity and uncertain meaning in the requirement a buyer use â€œbest effortsâ€ to obtain regulatory approvals and take other steps to complete a deal.
* Contract Drafting generally. URI/Cerberus highlighted the problems of overly-complex and short-hand drafting. The general distrust in the market has led to overparsing and scrutiny of contract wording for fatal ambiguity.
This is great stuff, and topics such as these allow business-inclined readers of the Times into dip a toe into the icy waters of corporate and contract law without the head-first dive of law school. I would imagine they’d be great in the classroom, taking students into the deals of the day and away (for a moment) from the musty cases of yesteryear.
The best part for me, however, was this closing observation of the state of deal forms in general:
But forms are slow to change. The person who typically keeps them is an overworked senior associate. In the interim and even beyond, I would also suspect that the distrust left by private equity firms has caused lawyers to tend towards overnegotiating language on an ad hoc basis. Risk-averseness can do that.
All I can say is amen.
Prof. Davidoff formerly practiced at Shearman & Sterling and Freshfields Bruckhaus Deringer, and now teaches law at my alma mater.