Class Actions Are An M&A Deal Killer

Quantifying financial potential, as a component of due diligence, is something that may be done with reasonable accuracy, but to quantify the nature and magnitude of potential class action litigation exposure is far more difficult. The risk of litigation – known, pending or threatened – can present a significant impediment to a pending M&A deal. This Today’s General Counsel article looks at the problem of litigation risk and outlines four options for addressing it: Settlement, setting aside an escrow, providing for litigation indemnity, or transferring risk through an insurance product.