Hell Or High Water

An article that appears in Harvard Law’s Forum On Corporate Governance written by Cadwalader, Wickersham & Taft attorneys discusses a type of merger agreement provision that eliminates uncertainty arising from the antitrust risk of the transaction. This is especially relevant, they write, because of the Biden Administration’s focus on antitrust enforcement and policy. Clearance under the Hart-Scott-Rodino Act has become a major risk factor affecting the speed and the certainty of the sale of a business. Sellers are increasingly asking buyers to agree to what is dubbed a “hell or high water” agreement. It is designed to provide the seller with certainty that the buyer is required to complete the transaction regardless of the position of the DOJ or FTC. The buyer is further required to comply with its commitment by the termination date of the agreement, often a year after the agreement was signed. The percentage of private sale agreements that contain hell or high water provisions is unknown because those agreements are not publicly available, but they are believed to be rare.