Chin-Fang (Megan) Wen

A new post-trial opinion from the Delaware Superior Court's Complex Commercial Litigation Division warns M&A dealmakers about a drafting trap. The order in which a materiality scrape is applied to an indemnification representation can change what that representation actually requires. A seller may end up liable for conduct far less serious than what it thought it had agreed to cover.

As private M&A deal terms continue to shift, understanding what’s market has become increasingly important when negotiating transactions. We reviewed key data points drawn from publicly available acquisition agreements filed on EDGAR, with a focus on deal terms we are seeing most frequently negotiated in practice, including indemnification, earnouts, and representations and warranties insurance (RWI). For our valued relationships, we prepared a short summary intended as a practical reference point for evaluating deal terms in today’s market and in ongoing transactions.

Background:
 
The New York Limited Liability Company Transparency Act (“NY LLCTA”), which was modeled after the Corporate Transparency Act (“CTA”), is set to take effect on January 1, 2026. The NY LLCTA, originally signed into law on December 23, 2023, and amended on March 1, 2024, imposes new reporting obligations on certain LLCs. If you own, manage, control, or plan to form a limited liability company either in New York or registered to do business as a foreign LLC in New York, this legislation will create reporting obligations about who owns and controls your company. LLCs formed or registered on or after January 1, 2026, must file a Beneficial Ownership Information (“BOI”) report or attestation of exemption within 30 days of formation or registration. LLCs formed or registered before January 1, 2026, have until January 1, 2027, to submit their initial filing with the New York Department of State (“NYDOS”).