Monday, November 10, 2008

Deal Failures: The Second Wave

In the past few weeks, the next generation of M&A failures has begun to take shape.


The first wave of failures consisted of the stream of private equity and strategic deals negotiated before August 2007. This next wave of failure comprises the deals negotiated after that time, deals largely struck in the spring and summer of 2008. This second wave of deals was negotiated with relatively full knowledge of the difficulties in the market and the problems with the pre-August 2007 private equity deal structure, particularly its optionality in the reverse termination form.


Nonetheless, like this first stream, many of these transactions are foundering on their termination mechanisms and the continued buyer optionality that buyers have been able to negotiate. Importantly, the troubles with JDA Software’s proposed deal for i2 Technologies that emerged Wednesday represents the second attempted renegotiation of a strategic deal with private-equity-like reverse termination fee provisions.

Steven M. Davidoff complete write up at :


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