Landmark Cases
This 1986 Delaware Supreme Court case held that once a company is "for sale," the board's duty shifts to maximizing shareholder value.
Revlon
A friendly acquirer is invited by the target board to make a competing bid to rescue the company from a hostile or unwanted suitor.
White Knight
This deal involved a billionaire being sued for specific performance in Delaware after initially trying to walk away.
Elon Musk / Twitter
This provision in a purchase agreement specifies a date after which either party may terminate the agreement if the deal has not yet closed.
Drop Dead Date / Outside Date
Typically 3-4% of EV
Termination Fee
In this case from 1985 often taught in law school, the Delaware Supreme Court found that a board breached its duty of care by approving a merger in a two-hour meeting without adequate information and led to the widespread adoption of Section 102(b)(7) exculpation clauses.
Smith v. Van Gorkom
Any measure, provision or amendment adopted to discourage or fend off an unwanted, hostile takeover attempt. The name evokes warding off predatory acquirers.
Shark Repellent
This 1988 leveraged buyout of a tabacco and food conglomerate for roughly $25 billion was immortalized in the book Barbarians at the Gate.
KKR / RJR Nabisco
Where a buyer knowingly closes a deal despite awareness of a seller’s breach of representations and then sues post-closing for indemnification.
Sandbagging
Regulatory efforts standard obligating the buyer to take any and all actions necessary to obtain antitrust clearance.
Hell or High Water
This 1985 case established the two-part intermediate standard of “enhanced scrutiny” for evaluating defensive measures adopted by a board in response to a hostile takeover threat – (i) the board must show it had reasonable grounds for believing a threat existed and (ii) the defensive measures must be reasonable in relation to the specific threat posed.
Unocal
This term describes an unsolicited, publicly announced offer made at a premium, designated to pressure the target’s board into negotiating by making the offer known to shareholders.
Bear Hug Letter
2008 fire-sale merger that was negotiated over a single weekend.
JPMorgan Chase / Bear Stearns
This post-signing provision gives the target company the right to actively solicit competing bids from third parties after executing a definitive agreement with the acquirer.
Go-shop
A letter that serves as a sponsor’s promise to fund its equity check.
ECL
This 2014 Delaware Supreme Court decision established that a merger with a controlling stockholder is reviewed under the business judgment rule – not entire fairness – if conditioned from the outset on approval by both a special committee and a majority-of-the-minority stockholder vote. In 2024, DGCL amendments codified and streamlined this framework, extending safe-harbor protections for conflicted controlling transactions.
MFW
This aggressive counter-tactic involves a takeover target turning around and making a bid for the hostile acquirer itself.
Pac Man Defense
Widely considered one of the most disastrous deals in corporate history, this 2000 mega-merger was valued at roughly $164 billion at announcement but ultimately destroyed over $100 billion in value.
AOL / Time Warner
This provision requires the target company’s board to submit the merger to a stockholder vote even if the board has withdrawn or changed its recommendation in favor of the deal.
Force the Vote
An exception to a no-shop clause – without this, a no-shop risks being unenforceable under Delaware law.
Fiduciary Out
This 2020 Delaware Chancery decision found that the seller breached the “ordinary course covenant” in an M&A transaction when, without securing the buyer’s consent or providing advance notice to the buyer, the seller undertook significant business changes in response to the COVID-19 pandemic. The provision required that the seller operate the business “only in the ordinary course consistent with past practices,” and the court found that the seller failed to do so, even though its pandemic response was similar to actions taken by industry peers.
AB Stable
This particularly aggressive variant of the poison pill cannot be redeemed by a newly elected board, effectively entrenching the incumbent directors. The Delaware Court of Chancery struck it down in Quickturn Design Systems.
Dead Hand Poison Pill
In 2023, this high-profile tech acquisition was abandoned / restructured after the UK’s Competition and Markets Authority blocked it, even though U.S. and EU regulators had approved or were expected to approve the deal.
Microsoft / Activision Blizzard
This provision – embedded in a standstill agreement – prohibits a bidder from publicly or privately requesting that the target board waive the standstill restrictions.
Don't ask, don't waive
Provisions in a purchase agreement that are included specifically to benefit the lenders in an acquisition financing. These provisions protect the banks and lenders financing a deal from being sued directly by the seller if the transaction fails, and may include terms relating to sole and exclusive remedy, exclusive venue, and waiver of jury trial.
Xerox Provision