“Getting to Yes: Bridging The Value Gap” (Law360)

March 2, 2010

Mr. Aquila and Mr. Sampas published an article titled, “Getting to Yes: Bridging The Value Gap,” in Law360. The article discussed earnouts and contingent value rights, noting that these instruments are becoming common pricing mechanisms used in M&A transactions. These tools are used to permit the buyer to pay a lower initial cash price, while providing the seller with assurance that substantial additional value will be received if the payment trigger is ultimately reached. The authors pointed to the pharmaceutical industry as a case where the purchase price of a company might not be determined before the close of the transaction, because the full potential value of these companies is tied directly to developmental stage drugs.