Delaware Raises the Bar for Third-Party Consents
When structuring an acquisition, the tax analysis tends to carry the day. After all, tax-free structures, if available, make a deal much, much more palatable for everyone involved. Nonetheless, the question of obtaining required third-party consents, if any, almost always arises during the due diligence phase and can have a material impact on the structure of a deal, or in extreme cases where a required consent cannot be structured around or otherwise obtained on reasonable terms, crater it altogether. In any case, the parties to an acquisition need to carefully craft the third-party consent language in the acquisition agreement so that it matches the business agreement among the parties. A recent decision by the Delaware Court of Chancery was less than sympathetic regarding a drafting error by counsel.
