This from the Lex column in today’s Financial Times, regarding Bear Stearns and the Cerberus litigation:
It is too simplistic to blame sloppy drafting for disputes. Still, there may be room for improvement in terms of updating the often-archaic language used in merger agreements, as firms such as Jones Day and contract specialist Kenneth Adams have called for. This would help in ensuring deal contracts make clearer the position of each party to a deal.
It is more likely that changing circumstances have fueled disputes. The rapid-fire deal environment of recent years may have created an impression that there was only a low risk of merger provisions being tested to destruction. Why kick up a fuss over some ambiguous wording when the deal seems certain to happen anyway? Few negotiators could have guessed that credit markets would deteriorate so sharply that buyers would choose to risk reputations by walking away. On this front, a cooling merger market should do its bit in prompting greater clarity.
