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Aspiring Lawyers - Interviews & Vacation Schemes
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The M&A Case Study Experiment - Part 1
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<blockquote data-quote="joeykmb" data-source="post: 129832" data-attributes="member: 27194"><p><strong>1. Why do you think Digion wants to buy Immersive?</strong></p><p></p><p>Digion is a company which provides distributed simulation software for video games and corporate use. Hence, Digion may want to acquire Immersive as they want to utilise Immersive’s valuable Intellectual Property to make their production process more efficient or diversify their product offering (online game softwares) to attract more customers. Further, Digion may want to rely on Immersive’s popularity in the market to instill more confidence amongst game developers to use their software.</p><p></p><p><strong>2. How would you advise Elena handle the situation with Tristan?</strong></p><p></p><p>I would advise Elena to request Immersive to sign a ‘Non-Solicit Clause’, which is a contractual promise by the buyer (Immersive) to not approach and attempt to poach Dijion’s employees post-acquisition for a period of time.</p><p></p><p><strong>3. What is the purpose of Clause 5 in Document 3?</strong></p><p></p><ul> <li data-xf-list-type="ul">Clause 5 serves as a condition precedent. This means that the terms under this clause must be fulfilled or abided by before full performance of the contract becomes due.</li> <li data-xf-list-type="ul">Clause 5 also sets out the scope of the task/role of each party leading up to the completion of the deal – this makes the process more efficient and transparent.</li> </ul><p><strong>4. In Clause 7, note the phrase, '<em>The Seller’s liability under the warranties and indemnities shall be subject to limitations</em>.' Suppose you were the lawyers acting for the Seller, what could you do to limit the Seller's liabilities? Why is this important?</strong></p><p></p><ul> <li data-xf-list-type="ul">As the lawyers representing the Seller, I would advise the seller to negotiate caps on liability. There are several types of liability caps such as the basket of claims, de minimis clause and the de maximus cap. The “basket clause” provides that Immersive only has to pay out the indemnity owed in its aggregate amount, once Digion’s total loss exceeds an agreed threshold. On the other hand, the de minimis clause restricts Digion’s ability to bring a claim unless the claim is worth at least a minimum specified amount. The De maximus cap places a limit on the maximum amount that can be claimed for particular breaches of contract.</li> <li data-xf-list-type="ul">Limiting the Seller’s liabilities is important because without them, the Buyer may exploit any warranties provided by the Seller to allow situations which would lead to the breaching of the warranty to occur, thus being able to continuously claim damages.</li> <li data-xf-list-type="ul">I would subsequently recommend the type of liability clause depending on the Seller’s objective (e.g. not wanting to spend time administering relatively small claims – basket or de minimis or wanting to limit their potential liability – de maximus cap)</li> </ul><p><strong>5. Why could it be important to Digion that '<em>the courts of England have exclusive jurisdiction to settle any dispute</em>'?</strong></p><p></p><p>Although Digion is a multinational company, it is headquartered in London. On the other hand, Immersive is based in Frankfurt. Therefore, it is important to Digion that the English courts have exclusive jurisdiction to settle any dispute to prevent Immersive for requesting that the dispute be settled in Frankfurt courts - where the different law jurisdiction may favour Immersive instead.</p></blockquote><p></p>
[QUOTE="joeykmb, post: 129832, member: 27194"] [B]1. Why do you think Digion wants to buy Immersive?[/B] Digion is a company which provides distributed simulation software for video games and corporate use. Hence, Digion may want to acquire Immersive as they want to utilise Immersive’s valuable Intellectual Property to make their production process more efficient or diversify their product offering (online game softwares) to attract more customers. Further, Digion may want to rely on Immersive’s popularity in the market to instill more confidence amongst game developers to use their software. [B]2. How would you advise Elena handle the situation with Tristan?[/B] I would advise Elena to request Immersive to sign a ‘Non-Solicit Clause’, which is a contractual promise by the buyer (Immersive) to not approach and attempt to poach Dijion’s employees post-acquisition for a period of time. [B]3. What is the purpose of Clause 5 in Document 3?[/B] [LIST] [*]Clause 5 serves as a condition precedent. This means that the terms under this clause must be fulfilled or abided by before full performance of the contract becomes due. [*]Clause 5 also sets out the scope of the task/role of each party leading up to the completion of the deal – this makes the process more efficient and transparent. [/LIST] [B]4. In Clause 7, note the phrase, '[I]The Seller’s liability under the warranties and indemnities shall be subject to limitations[/I].' Suppose you were the lawyers acting for the Seller, what could you do to limit the Seller's liabilities? Why is this important?[/B] [LIST] [*]As the lawyers representing the Seller, I would advise the seller to negotiate caps on liability. There are several types of liability caps such as the basket of claims, de minimis clause and the de maximus cap. The “basket clause” provides that Immersive only has to pay out the indemnity owed in its aggregate amount, once Digion’s total loss exceeds an agreed threshold. On the other hand, the de minimis clause restricts Digion’s ability to bring a claim unless the claim is worth at least a minimum specified amount. The De maximus cap places a limit on the maximum amount that can be claimed for particular breaches of contract. [*]Limiting the Seller’s liabilities is important because without them, the Buyer may exploit any warranties provided by the Seller to allow situations which would lead to the breaching of the warranty to occur, thus being able to continuously claim damages. [*]I would subsequently recommend the type of liability clause depending on the Seller’s objective (e.g. not wanting to spend time administering relatively small claims – basket or de minimis or wanting to limit their potential liability – de maximus cap) [/LIST] [B]5. Why could it be important to Digion that '[I]the courts of England have exclusive jurisdiction to settle any dispute[/I]'?[/B] Although Digion is a multinational company, it is headquartered in London. On the other hand, Immersive is based in Frankfurt. Therefore, it is important to Digion that the English courts have exclusive jurisdiction to settle any dispute to prevent Immersive for requesting that the dispute be settled in Frankfurt courts - where the different law jurisdiction may favour Immersive instead. [/QUOTE]
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