The Sky’s the Limit as Comcast and Fox Prepare for Battle at the Auction Block

For the last year, a heated ownership battle has been unfolding between Comcast and 20th Century Fox in their contest to acquire Sky PLC. Sky is Europe’s leading media company and the largest pay-TV broadcaster in the UK, with over 21 million subscribers and 30,000 employees (not to mention a mercilessly dominant professional cycling club). While many such battles are settled outside of the public eye, this one is destined for a different fate: Over the next two days, the Comcast/Fox contest will culminate in an old-school auction—one ordered by the UK Takeover Panel, which oversees and regulates all … Read more

Information Challenges and the Use of Earnouts in Mergers and Acquisitions

In mergers and acquisitions transactions with privately-held target companies, transacting parties will often agree to make payments to the target shareholders contingent upon some post-closing events.  One frequently used mechanism is an earnout.  With an earnout, the parties will agree upon post-closing performance targets, using measures such as earnings, net income, or gross revenue, and the additional amount of consideration that the target shareholders are entitled to receive will depend on whether such performance targets are met over the earnout period, which typically lasts from one to five years after closing.  For example, after paying $10 million at closing, an … Read more

Taking a Financial Position in Your Opponent in Litigation

Plaintiffs sometimes have significant financial interests in their opponents, interests that extend beyond the boundaries of the lawsuits themselves.  In some situations, plaintiffs maintain a “long” financial position.  For instance, in securities litigation or direct or derivative litigation alleging a breach of fiduciary duties under state corporate law, the plaintiffs are typically a subset of the firm’s current shareholders.  When the defendant-firm loses at trial and pays damages—or, more commonly, avoids trial by retaining defense counsel and/or making a settlement payment to plaintiffs and their counsel—while the plaintiff-shareholders may receive a direct monetary benefit, they also suffer an indirect loss … Read more

Relational Sanctions against Non-Profit Organizations: Why a Selfish Entrepreneur would Organize a Non-Profit Enterprise

The following post comes to us from Albert Choi, Professor of Law, University of Virginia School of Law, and is based on his recent paper, “Relational Sanctions against Non-Profit Organizations: Why a Selfish Entrepreneur would Organize a Non-Profit Enterprise.” The full paper is available here.

One of the most influential theories on the purpose and functions of non-profit organizations is that the non-profit status works as a signal of, or commitment to provide, better quality product or service when quality is difficult or impossible to verify.  Simply stated, when the person who controls a non-profit organization is constrained from … Read more