That’s Not the Way We Do It Here: Reconciling Sandbagging Provisions for Multinational Buyers

Scott Macbeth, Senior Legal Counsel, The Boston Consulting Group, Inc., USA

Although any number of provisions in an M&A purchase agreement can, and are, negotiated with a wide range of individual outcomes, there is often an overarching set of market norms silently operating as guardrails for the parties. These guideposts help to narrow the conversation and, in the absence of clear deal drivers, find an acceptable allocation of risk between the parties. But what happens when what is “market” in one geography varies dramatically from established practices in another jurisdiction? This tension makes it challenging to find the platform for consensus and can create an instinctive pull to dig into entrenched positions and resist equitable solutions. Moreover, when a counterparty challenges a familiar, domestic, standard, counsel can struggle to reset -- to see the rationale for the other position or appreciate the need to articulate the logic for his or her own view. In this article, we explore and combat this tendency in the context of one common private company M&A provision: the sandbagging or knowledge savings clause.

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USA Mergers & Acquisition Consultant September 2018 Vol.11, No. 44, Summer 2018

Scott Macbeth

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Scott Macbeth is Senior Legal Counsel at The Boston Consulting Group, Inc. focusing primarily on BCG's M&A activities. He has over 10 years of M&A experience, with the last 7 acting as lead in-house counsel for a series of transactions around the world.

The Boston Consulting Group, Inc.

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The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries.

USA Mergers & Acquisition Consultant September 2018 Vol.11, No. 44, Summer 2018