M&A Boot Camp booklet 2023 - Flipbook - Page 25
Structuring the Acquisition of a Privately Held Delaware Target
Corporation (“T”) or its Business – Selected Considerations1
What approval of
T’s stockholders
is required for
the purchase of
100% of T’s stock
or assets?
Are statutory
appraisal
rights
available to
dissenting T
stockholders?
Will transaction
trigger
“standard” antiassignment
clauses2 in T’s
contracts?
To what extent is
transaction
structure
suitable for
acquisition of
part (but not all)
of T’s business?
Will buyer (or a
sub) become
subject to T
liabilities that are
not contractually
assumed?
Will transaction
generally
trigger payment
of state sales
taxes and other
transfer taxes?
Will
transaction
generally
result in two
levels of U.S.
income tax?5
Purchase
of Stock
for Cash
Unanimous
Not applicable
No
Less suitable
Yes
No
No
Purchase
of Assets
for Cash
Majority of
outstanding
T shares
No
Yes
More suitable
No (with
exceptions)
Yes (with
exceptions)
Yes (if followed
by distribution
of cash to T
stockholders)
Straight
Forward
Cash
Merger
Majority of
outstanding
T shares
Yes
Maybe
Less suitable
Yes
No
Yes
Forward
Subsidiary
Cash
Merger
Majority of
outstanding
T shares
Yes
Maybe
Less suitable
Yes
No
Yes
Reverse
Subsidiary
Cash
Merger
Majority of
outstanding
T shares
Yes
No (but see SQL
decision3 and
compare
Meso Scale
decisions4)
Less suitable
Yes
No
No
1 This
chart is not intended to provide a complete analysis of the matters covered, but rather is intended to be used and referred to in conjunction with a more comprehensive
oral presentation regarding those matters. Accordingly, there are potentially important exceptions and qualifications that are not reflected in this chart.
2 i.e.,
clauses that prohibit actual assignments of contracts but that do not refer to broader changes of control of the target corporation.
3 SQL
Solutions, Inc. v. Oracle Corp., 1991 WL 626458 (N.D. Cal. Dec. 1991)
4 Meso
Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 2011 WL 1348438 (Del. Ch. Apr. 2011); Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 62 A.3d 62 (Del. Ch.
Mar. 2013)
5 i.e.,
a tax at the corporate level and a tax at the stockholder level.