AKDS: Attorney Knowledge Demonstration Syndrome

So this morning, during the course of mundane corporate due diligence, I erroneously posited that a certain document truly wasn't a permit in an email. A simple response stating "No Corkie it is" would be sufficient, however, my superior clearly suffers from AKDS.

It is a "Permit"--you should re-read the APA definition. That definition is incredibly broad (too broad if I'm representing the Seller), and intentionally so.

I know a lot of this language looks like "boilerplate" and meaningless but I assure you it is not. A lot of money has been won/lost over terms such as "would reasonably be expected to have a material adverse effect" vs. "could reasonably be expected to have a material adverse effect". Most non-M&A lawyers (or those M&A lawyers that are lazy--intellectually or otherwise) overlook these things and you need to be intellectually curious about why things are put together the way they are.

You should also read as many M&A periodicals about the cases that do get reported. For example, the IPB v. Tyson case seems to be a dry case about whether a Seller's post-signing/pre-closing collapse in business would constitute a "material adverse change" that would entitle the Buyer to "walk" the deal. Undoubtedly most people looking at it without a careful review of the language would say "of course--that Seller sold the Buyer a bill of goods and that's exactly what the MAE clause was for." Upon closer review, however, you'll note that the court carefully analyzed the language and held the Buyer to a high (unreasonably, IMO) standard for proving MAE. In IBP the burden was shifted to the Buyer, who could not meet it, and thus overpaid for a business. Needless to say the counsel for the Buyer likely lost a multi-million dollar client, and I don't want that to happen to my clients. Oh, and the case could have been decided differently had the Delaware court analyzed it under Delaware, rather than New York law, which governed the purchase agreement. One more reason why these "boilerplate" clauses like Choice of Law are also important.

I now consider myself informed.