COVID-19 unsurprisingly upended corporate dealmaking last spring. The ensuing lawsuits provide important lessons on the interpretation of key contractual provisions, such as material adverse effect (MAE) clauses and interim operating covenants, in light of the pandemic. The lawsuits also elucidate the approaches taken by the courts and merger parties in resolving deal disputes arising from the extraordinary circumstances of the last year.

When to Walk Away

As we saw last year, multiple deal lawsuits were resolved before the parties had their day in court, either through renegotiation of deal terms to reflect new realities or by a parting of ways. Advent International’s announced acquisition of cybersecurity firm Forescout Technologies Inc. is a good example of the former, while L Brands’ planned sale of part of its Victoria’s Secret and PINK businesses to Sycamore Partners illustrates the latter.

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