Contractual Indemnity in M&A Deals: Transactional and Litigation Considerations, Terms to Minimize Financial Risks

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Tuesday, May 11, 2021

Recorded event now available

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Program Materials

This CLE webinar will guide M&A counsel to negotiate and draft indemnification provisions in merger documents, asset purchase agreements, and stock purchase agreements. The panel will discuss best practices for addressing challenges that may arise with indemnification claims, explain the various theories of measuring damages for breach, and examine how insurance products are being used to cover indemnities.

Description

Indemnification provisions are standard clauses in M&A contracts that help parties minimize financial loss if a deal goes south. Counsel negotiating indemnification terms must consider time, subject matter, dollar limitations, escrowed funds, setoff rights, and indemnification payment. The risks of boilerplate provisions far offset the convenience.

Indemnity clauses are challenging to negotiate. The seller usually seeks to limit its indemnification liability while the buyer wants as much indemnification protection as possible.

Deal counsel must ensure that the indemnity provisions clearly describe the appropriate coverages and limitations and are properly coordinated with other agreement provisions. Deal counsel must also make sure that the indemnity provisions are enforceable against the seller's stockholders.

Counsel must also consider how damages will be determined in the event of a breach. Also, deal attorneys should evaluate and advise their clients on purchasing insurance products to cover indemnities.

Listen as our authoritative panel of deal attorneys explains current trends in negotiating indemnification provisions in M&A contracts. The panel will discuss strategies for limiting or expanding indemnification liability and enforcing indemnity clauses, including determining damages. The panel will also explain how insurance products are being used to cover indemnities.

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Outline

  1. Negotiating indemnification provisions
    1. Types of damages covered
    2. Caps, baskets, and other limitations
    3. Fraud exclusion
    4. Purchase price adjustment and double-dipping
    5. Defense of third-party claims
    6. Enforceability of indemnification obligations against non-signatories
    7. Evaluating and addressing creditworthiness of indemnitors
  2. Determining types of damages recoverable under indemnification provisions in the event of a breach
  3. The use of insurance products to cover indemnities

Benefits

The panel will review these and other key issues:

  • What are the current trends in drafting and negotiating contractual indemnity provisions?
  • What are the most commonly disputed issues in M&A indemnity, and what are some practical strategies for resolving them?
  • How can counsel for buyers expand indemnification protection and counsel for sellers limit indemnification liability when drafting and negotiating indemnity clauses?
  • How are damages for breach measured under indemnification provisions?
  • How are insurance products being used to cover indemnities?

Faculty

Diakos, Joanna
Joanna Diakos

Partner
K&L Gates

Ms. Diakos is a litigation partner in the firm's New York City office. Her practice involves the representation of...  |  Read More

Duran, Sara
Sara Garcia Duran

Partner
Sidley Austin

Ms. Duran focuses her practice on complex corporate and transactional matters, including representation of private...  |  Read More

Stark, Lisa
Lisa R. Stark

Partner
K&L Gates

Ms. Stark has nearly 15 years of corporate experience in mergers and acquisitions, strategic investments, initial...  |  Read More

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