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Aspiring Lawyers - Interviews & Vacation Schemes
Commercial Awareness Discussion
The M&A Case Study Experiment - Part 1
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<blockquote data-quote="itsme_kk" data-source="post: 128968" data-attributes="member: 22563"><p><strong><em>1. Why do you think Digion wants to buy Immersive?</em></strong></p><p></p><p>There are three possible reasons why Digion wants to buy Immersive:</p><ul> <li data-xf-list-type="ul">To expand to the European market, as Immersive is based in Frankfurt; and Digion is known to be present in the UK, the US and Canada;</li> <li data-xf-list-type="ul">To acquire valuable employees – Immersive co-founders Leon Alexander and Maria May;</li> <li data-xf-list-type="ul">To acquire rights for the Immersive’s IP.</li> </ul><p><strong><em>2. How would you advise Elena handle the situation with Tristan?</em></strong></p><p></p><p>Elena could negotiate Tristan service contract/ employment contract termination however it is likely to be costly to Digion and/or may lead to an employment claim. To retain the employees that Tristan may try to poach, it is important to review their current employment contracts and possibly include non-compete clauses in it.</p><p></p><p><strong><em>3. What is the purpose of Clause 5 in Document 3?</em></strong></p><p></p><p>Clause 5 lists the conditions on which the acquisition is to be proceeded. However, it is indicative only, as, according to clause 1.2, it is not legally binding. Therefore, the completing of these conditions does not guarantee the acquisition.</p><p></p><p><strong><em>4. In Clause 7, note the phrase, 'The Seller’s liability under the warranties and indemnities shall be subject to limitations.' Suppose you were the lawyers acting for the Seller, what could you do to limit the Seller's liabilities? Why is this important?</em></strong></p><p></p><p>As a lawyer for the Seller, I would firstly limit the Seller’s liability by negotiating the scope of warranties and indemnities. From the Seller’s perspective, the scope of warranties and indemnities shall be as small and clearly defined as possible. Secondly, I would include a set of standard limitation clauses on Seller’s liability, for instance, to put limits on the amount of claims, so there is a limit of what Buyer can claim in case of breach of warranty. Finally, I would advise the Seller to make an effective disclosure, as by disclosing the matter the Seller is discharging its liability.</p><p>It is important to limit Seller’s liabilities under the warranties and indemnities as otherwise Buyer may bring a claim for damages if any of the Seller’s warranties turn to be untrue.</p><p></p><p><strong><em>5. Why could it be important to Digion that 'the courts of England have exclusive jurisdiction to settle any dispute'?</em></strong></p><p></p><p>As Digion is headquartered in London and thus is operating under the UK law, it would be much more convenient for it to resolve any potential issue within the UK jurisdiction</p></blockquote><p></p>
[QUOTE="itsme_kk, post: 128968, member: 22563"] [B][I]1. Why do you think Digion wants to buy Immersive?[/I][/B] There are three possible reasons why Digion wants to buy Immersive: [LIST] [*]To expand to the European market, as Immersive is based in Frankfurt; and Digion is known to be present in the UK, the US and Canada; [*]To acquire valuable employees – Immersive co-founders Leon Alexander and Maria May; [*]To acquire rights for the Immersive’s IP. [/LIST] [B][I]2. How would you advise Elena handle the situation with Tristan?[/I][/B] Elena could negotiate Tristan service contract/ employment contract termination however it is likely to be costly to Digion and/or may lead to an employment claim. To retain the employees that Tristan may try to poach, it is important to review their current employment contracts and possibly include non-compete clauses in it. [B][I]3. What is the purpose of Clause 5 in Document 3?[/I][/B] Clause 5 lists the conditions on which the acquisition is to be proceeded. However, it is indicative only, as, according to clause 1.2, it is not legally binding. Therefore, the completing of these conditions does not guarantee the acquisition. [B][I]4. In Clause 7, note the phrase, 'The Seller’s liability under the warranties and indemnities shall be subject to limitations.' Suppose you were the lawyers acting for the Seller, what could you do to limit the Seller's liabilities? Why is this important?[/I][/B] As a lawyer for the Seller, I would firstly limit the Seller’s liability by negotiating the scope of warranties and indemnities. From the Seller’s perspective, the scope of warranties and indemnities shall be as small and clearly defined as possible. Secondly, I would include a set of standard limitation clauses on Seller’s liability, for instance, to put limits on the amount of claims, so there is a limit of what Buyer can claim in case of breach of warranty. Finally, I would advise the Seller to make an effective disclosure, as by disclosing the matter the Seller is discharging its liability. It is important to limit Seller’s liabilities under the warranties and indemnities as otherwise Buyer may bring a claim for damages if any of the Seller’s warranties turn to be untrue. [B][I]5. Why could it be important to Digion that 'the courts of England have exclusive jurisdiction to settle any dispute'?[/I][/B] As Digion is headquartered in London and thus is operating under the UK law, it would be much more convenient for it to resolve any potential issue within the UK jurisdiction [/QUOTE]
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