Drafting Private Company Target Merger Agreements: Risk Allocation, Reps and Warranties, and Maximizing Indemnification Recourse

Negotiating Risk Allocation Provisions in Private Mergers After Cigna v. Audax

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

Conducted on Thursday, March 3, 2016

Recorded event now available

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Course Materials

This CLE course will provide guidance to buyer’s and seller’s counsel for drafting merger agreements for the sale of a private company target to a private or public company. The panel will discuss how recent case law and market trends are impacting the use and drafting of representations and warranties, post-closing adjustments, indemnification provisions, and other key provisions in private company target merger agreements and ancillary agreements.


When a private company target is acquired by a private or public company through a merger structure, the buyer will typically bind the target to numerous post-closing risk allocation terms, including representations and warranties, post-closing adjustments, and indemnification for breaches of representations, warranties and covenants. Deal counsel drafting the agreements must understand how to negotiate these terms in a manner that is most beneficial to their client’s position.

The enforcement of risk allocation provisions and other obligations against nonsignatory equityholders of the private company target is complicated. Until the seminal 2014 case, Cigna v. Audax, buyers’ counsel often relied on the letter of transmittal, an ancillary agreement signed by equityholders in connection with a merger, as an avenue for committing equityholders to post-closing risk allocation terms. However, the Delaware Court of Chancery declared this practice unenforcable in Cigna. Post-Cigna, deal counsel for buyers can increase the likelihood of binding the target’s nonsignatory equityholders to post-closing risk allocation terms and other obligations through a number of strategic actions.

Listen as our authoritative panel examines the challenges and complexities of drafting private company target merger agreements and ancillary agreements, including the issues surrounding whether nonsignatory shareholders can be bound by the agreements. The panel will review recent case law and discuss considerations and best practices when negotiating merger transactions involving private company targets.



  1. Key provisions in private company target merger agreements
  2. Impact of Cigna v. Audax on private company target mergers
  3. Considerations and best practices for drafting merger agreements and ancillary agreements


The panel will review these and other key issues:

  • How has Cigna v. Audax impacted private company target mergers?
  • What challenges do counsel face when advising buyers and private company targets in merger transactions?
  • What are the key considerations and best practices for counsel drafting private target merger agreements and ancillary agreements?


Lisa J. Hedrick
Lisa J. Hedrick

Hirschler Fleischer

Ms. Hedrick's practice focuses on mergers and acquisitions, capital raising, private equity, business formation and...  |  Read More

Andrew M. Lohmann
Andrew M. Lohmann

Hirschler Fleischer

Mr. Lohmann is Vice Chair of the firm's Business Section and Chairman of the firm's Mergers & Acquisitions...  |  Read More

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