Class 4 - Slides - Mergers & Acquisitions Cornell Law...

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1 [NYCorp: 2568627.7] Cornell Law School Fall Semester 2009 Mark I. Greene Richard Hall Cravath, Swaine & Moore LLP
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[NYCorp: 2568627.7] 2 Class 4 Letters of Intent, Purchase Price
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[NYCorp: 2568627.7] 3 Letter of Intent (“LOI”) Purpose of the LOI Advantages Creates a “term sheet” for the deal Drives business discussion of key terms Parties feel committed (even though not legally bound in a non-binding LOI) Disadvantages Presents an incomplete understanding If not properly drafted, risk that the LOI is binding when the parties do not want it to be Increases pressure on decision to disclose publicly (public company deals)
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[NYCorp: 2568627.7] 4 What’s in a LOI? Description of the transaction subject matter Purchase price Basic terms of the agreement
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[NYCorp: 2568627.7] 5 Binding v. Non-Binding Agreements Determinative factor is an intention not to be bound – unambiguous drafting of a “this is not binding” statement
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Class 4 - Slides - Mergers & Acquisitions Cornell Law...

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