The COVID-19 pandemic and resulting market and deal-related disruptions put renewed focus on risk-allocating provisions of acquisition agreements. Transactions that carry antitrust or other regulatory risk use a variety of mechanisms to allocate such risks. These include termination fees, best efforts clauses, material adverse effect (MAE) and force majeure clauses, and ordinary course of business covenants. At the far end of the risk allocation spectrum are provisions, newer to M&A deals, by which parties exclude any excuse for performance “between the devil and the deep blue sea”—or, as the idiom has evolved, to require performance “come hell or high water.” They can effectively shift risk and drive the outcome of disputes if the deal does not close.
My colleagues at Quinn Emanuel have composed an edifying explanation that covers the evolution of these clauses and how they have played out in the courts. To read their full discussion, please find the full note here.