Negotiating Contingent Value Rights in M&A Transactions

Leveraging CVRs to Bridge the Value Gap and Facilitate Deals

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


Conducted on Tuesday, February 9, 2010

Recorded event now available

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Program Materials

This CLE webinar will discuss the types of acquisition deals and conditions for which CVRs are most suited and provide best practices for negotiating and structuring deals involving CVRs in a way that benefits and protects both buyers and sellers.

Description

Continuing uncertainty about the current value and future performance of businesses and difficult credit market conditions have pushed buyers and sellers to include contingent value rights (CVRs) as a valuation and financing bridging mechanism in merger and acquisition deals.

CVRs help alleviate buyers’ and sellers’ concerns about tendering or receiving a fair purchase price by either allowing an upward price adjustment post-closing, when sufficient value is created to justify a higher purchase amount, or creatively financing an originally agreed upon purchase price.

Although CVRs add additional complexity to M&A transactions, they are an appealing option in the current environment when buyers and sellers cannot agree on valuation or buyers cannot readily finance an attractive acquisition.

Listen as our panel of deal attorneys and an investment banker explains how CVRs work, the pros and cons of using CVRs in M&A deals, and strategies for negotiating and structuring deals involving CVRs in a way that benefits and protects both buyers and sellers.

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Outline

  1. Contingent value rights (CVRs) — overview
    1. Definitions
    2. Common use and types of CVRs
    3. Implications for buyers and sellers
    4. Current state of CVR deals
  2. Deal considerations
    1. Securities issues
    2. Financial issues
    3. Tax issues
    4. Accounting issues
    5. Documentation issues
  3. Strategies for negotiating and implementing CVRs
    1. Key negotiating terms and conditions
    2. Dealing with unanticipated events
    3. Post-closing activities by buyer and seller
    4. Resolving conflicting positions

Benefits

The panel will review these and other key questions:

  • How are CVRs being used to close the valuation gap between buyers and sellers in M&A deals?
  • In what situations are CVRs an attractive option?
  • What are the key legal, accounting and tax issues to understand and consider when using CVRs?
  • What strategies have been effective for negotiating deals involving CVRs?

Faculty

Steven R. Barth
Steven R. Barth

Partner
Foley & Lardner

He practices in the areas of mergers, acquisitions, leveraged recapitalizations and buyouts; venture capital and...  |  Read More

Timothy Carroll
Timothy Carroll
Principal, Consumer and Retail
William Blair & Company

He has more than 22 years of investment banking experience, seven years of commercial banking experience and two years...  |  Read More

Timothy H. Shea
Timothy H. Shea

Foley & Lardner

He has experience representing clients in a variety of industries on transactional and corporate matters. His practice...  |  Read More

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