From the Editor
You may notice a slight change in the logo for the Business Vantage Point blog. Based on feedback from clients, our readers and the rapidly changing legal landscape for business, which has led us to post on a wide range of legal developments well beyond topics solely of interest to the venture capital community, as evidenced by the topics highlighted in this recap, we have rebranded the venture capital blog as a blog directed at the overall business community. We hope this will more accurately represent the breadth of the insights and content provided and better serve our audience, and we look forward to your feedback in the future.
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IN THIS ISSUE:
Delaware Corporate Fiduciary Duties Versus Covenants Not to Sue
New Jersey Angel Match Program
Court Rules That a Corporation May Not Assert Privilege Against an Investor Represented on the Board
The Impact of Rising Interest Rates on M&A
Delaware Corporate Fiduciary Duties Versus Covenants Not to Sue
In the recent case New Enterprise Associates 14, L.P. et al. v. Rich et al., the Delaware Court of Chancery denied the defendants’ motion to dismiss a breach of fiduciary duty claim notwithstanding that the plaintiffs had previously agreed not to sue the defendants based on the precise claim at issue. The plaintiffs, minority investors in a Delaware corporation, had signed a voting agreement under which the defendants agreed not to sue the majority – including for breach of fiduciary duties – if the majority proceeded with a drag-along sale that satisfied certain requirements. Read More...
New Jersey Angel Match Program
The Angel Match Program (AMP) is an initiative launched by the New Jersey Economic Development Authority (NJEDA) to support early-stage businesses in New Jersey. This program is specifically designed to provide funding and support to startups and emerging companies in the state, with the goal of helping them grow and succeed.
The AMP is a unique program that aims to provide funding to early-stage companies in the form of equity investments. This means that the NJEDA will invest in these companies in exchange for ownership shares. The program has been designed to help address a funding gap that many startups face in their early stages. Read More...
Court Rules That a Corporation May Not Assert Privilege Against an Investor Represented on the Board
When a dispute erupts into litigation between a corporation and one of its investors, the corporation will likely seek to invoke the attorney-client privilege to prevent the investor from accessing otherwise relevant communications between the corporation’s board of directors and its counsel. However, according to a recent decision by the Delaware Court of Chancery, the attorney-client privilege may not shield such materials from production to the investor in situations where the director wears two hats because of affiliation with the investor. Corporations governed by Delaware law should familiarize themselves with this decision to ensure that privileged information is properly protected from disclosure. Read More...
The Impact of Rising Interest Rates on M&A
After several years of record-breaking levels of merger and acquisition (M&A) activity, late 2022 into 2023 has seen market volatility, persistent inflation, rising interest rates, continuing supply chain issues, global conflicts and fears of a possible economic downturn that have resulted in a significant slowing in deal flow as well as decreased exit values. As the U.S. economy emerged from the COVID-19 pandemic, the Federal Reserve aggressively raised interest rates to combat inflation, raising rates by a historic 3.75 percentage points in 2022 alone. Although only one of many factors at play, interest rates play a critical role in shaping the decisions of both buyers and sellers in acquisition transactions in various ways. While deal volume and valuations have drastically fallen from the highs of recent years, the prevailing high-interest rate environment can provide both challenges and opportunities. Read More....
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