Archive:January 8, 2015

1
Private Company M&A: Post-Closing Purchase Price Adjustment Provisions: New Decision Holds Some Common Mechanics Unenforceable
2
Department of Commerce’s BE-13 Mandatory Survey of New Foreign Direct Investment in the United States

Private Company M&A: Post-Closing Purchase Price Adjustment Provisions: New Decision Holds Some Common Mechanics Unenforceable

In private company acquisitions, it is common for the buyer to require that a portion of the merger consideration be set aside in escrow as an accessible source of funds to cover the buyer’s post-closing indemnification claims relating to breaches of the target company’s representations and warranties and other specified contingencies. However, the buyer might demand additional protection if its losses under such claims exceed the escrow amount by insisting upon collection of the full loss from the target company’s stockholders. If the losses are significant and the indemnification obligations are uncapped or have a sufficiently high cap, this could require the target company’s stockholders to return their full pro rata share of the merger consideration to the buyer.

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Department of Commerce’s BE-13 Mandatory Survey of New Foreign Direct Investment in the United States

New Requirement to Report Foreign Direct investment in the U.S.

The Bureau of Economic Analysis of the U.S. Department of Commerce announced in September 2014 that it was reinstating a mandatory requirement that U.S. companies report new foreign investment through the filing of one of a family of survey forms designated as BE-13. BE-13 forms are filed electronically here.

Authority for the Survey

The authority for the survey is based on the International Investment and Trade in Services Survey Act, 90 Stat. 2059, 22 U.S.C. § 3101. The Act grants broad authority to the President “to collect information on international investment and United States foreign trade in services, whether directly or by affiliates, including related information necessary for assessing the impact of such investment and trade, to authorize the collection and use of information on direct investments owned or controlled directly or indirectly by foreign governments or persons, and to provide analyses of such information to the Congress, the executive agencies, and the general public.” 22 U.S.C. § 3101(b).

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