Navigating trans‐atlantic deals: warranties, disclosure and material adverse change

Publication Date20 Nov 2007
Pages472-481
DOIhttps://doi.org/10.1108/13581980710835308
AuthorJohn Phillips,Julian Runnicles,Jeffery Schwartz
SubjectAccounting & finance
FEATURE
Navigating trans-atlantic deals:
warranties, disclosure and
material adverse change
John Phillips and Julian Runnicles
Jones Day, London, UK, and
Jeffery Schwartz
Jones Day, Moscow, Russia
Abstract
Purpose – The purpose of this paper is to explore certain remaining differences in the underlying
legal considerations and the differing customs and practices of US and UK mergers and acquisitions in
relation to certain issues.
Design/methodology/approach – A review was undertaken of the leading cases in the UK and
various states of the USA and custom and practice in the UK and USA, in each case in relation to the
following areas: representations and warranties; disclosure; the effect of the buyer’s knowledge;
repetition of warranties/representations; and material adverse change.
Findings – Although the historical differences between UK and US mergers and acquisitions are
diminishing as the frequency of trans-atlantic transactions increases, there remain certain variances
which have important implications for the allocation of risk between a buyer and seller in any
trans-atlantic merger or acquisition.
Originality/value – This paper is useful for professional advisers acting in connection with a
trans-atlantic merger or acquisition and for buyers and sellers contemplating such transactions.
Keywords Warranties,Disclosure, Acquisitions and mergers,United States of America,
United Kingdom
Paper type General review
Historic differences between UK and US mergers and acquisitions practice are
diminishing as the frequency of trans-atlantic deals increases. However, there remain
important variances which the parties to any trans-atlantic transaction must bear in
mind when considering the allocation of risk as between a buyer and a seller. This paper
focuses on such differences in the following areas:
.whether “representations and warranties” or just “warranties” are given by the
seller;
.disclosure;
.the effect of the buyer’s knowledge;
.repetition of warranties/representations; and
.material adverse change clauses.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
JFRC
15,4
472
Journal of Financial Regulation and
Compliance
Vol. 15 No. 4, 2007
pp. 472-481
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980710835308

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