Delaware Supreme Court Makes Earnouts Less Risky For Buyers
Earnout Decision Partially Reversed Because Buyer Did Not Have to Pursue an Alternative Regulatory Pathway
Earnouts are a common feature of life sciences deals, and a 2024 Chancery Court decision had increased the financial risk for buyers agreeing to an earnout. However, the Delaware Supreme Court’s partial reversal of Johnson & Johnson v. Fortis Advisors LLC has addressed this issue by limiting the application of the implied covenant of good faith and fair dealing.
Earnout Decision Partially Reversed Because Buyer Did Not Have to Pursue an Alternative Regulatory Pathway
Key Regulatory and Compliance Considerations for Early-Stage Life Sciences Companies and Their Investors
Early-stage life sciences companies and the investors that back them are laser-focused on evidenced-based development and approval hurdles. However, even at early stages, failure to adequately prioritize more nuanced regulatory and compliance issues can have a significant impact on exit value and create potential liability for investors and acquirers. Geoffrey Levin, Torrey Cope, Marie Manley, Donielle McCutcheon, Andrew Shoyer, Michele Tagliaferri, and Julea Lipiz highlight eight key areas for focus.
New EU Subsidies Rules Likely to Catch Global Life Sciences Companies
Given their extensive involvement in public procurement contracting, life sciences companies are likely to be heavily impacted by the EU’s Foreign Subsidies Regulation (the “FSR”), which has the potential to hold up tender awards over competition concerns. Michele Tagliaferri and Alessandra Moroni explain.
Seven Things Life Sciences Buyers and Sellers Should Know About CVRs
The life sciences industry has recently seen a proliferation of Contingent Value Rights (CVRs), the public M&A equivalent of the earnout used in private deals. Sally Wagner Partin, Sharon Flanagan, and Hannah Brown explain what you need to know about them.
