Legal Brief: The Contract Trumps the Conversation

Types : Bylined Articles

In a security industry acquisition, the merger and integration clause means the dinner conversation is irrelevant – only the contract counts.

Imagine you are a minority owner in a company being sold for serious money. You attend an early dinner with the prospective buyer, where deal terms are discussed. After that, you largely check out of the process – no review of the term sheet, no review of the sale agreement drafts, no legal counsel. You just want your payout.

The deal closes, you get tens of millions of dollars, and months later, you actually read the agreement – only to find terms you claim were never discussed at that dinner.

Some of those terms restrict you – for example, obligating you not to compete or not to solicit former customers and employees of the company. You may claim a contrary discussion occurred over dinner, but even if your memory is correct, it usually will not matter.