Future deals will likely include language to keep agreements from falling apart even in a pandemic.
Sycamore Partners’ lawsuit this week seeking to terminate its agreement to buy a majority of Victoria’s Secret holds lessons for future dealmaking in the coronavirus era.
“Anytime we litigate something, it helps to tighten up our deals,” she said. “We will see some tightening in the M&A space, in terms of how the contract is written, and when you can get out of it.” Contracts generally have rigorous enforcement power under normal circumstances, but it remains to be seen how courts will respond to such arguments during an unprecedented global crisis, Riordan said.
What this means for dealmaking going forward, especially in a time of anticipated consolidations in the industry, is that the pandemic must be a bigger factor in the contract language, attorneys said.
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