The fingerprints of LinkedIn’s lawyers are all over the deal announced last week in which Microsoft agreed to buy the professional networking site for $26.2 billion, according to an analysis of the terms using Bloomberg Law’s Draft Analyzer tool.
Most of the provisions in the agreement were similar to language used in other deals by Wilson Sonsini, which was LinkedIn’s deal counsel, rather than in those previously used by Simpson Thacher, which represented Microsoft.
Acquirer’s counsel typically are the drafters, although there are exceptions such as when the seller’s counsel has some expertise in a deal and it might be more efficient for them to prepare the first draft, Michael Brockmeyer, a partner with Frommer Lawrence & Haug LLP told Bloomberg BNA.
For a deal this size, who provided the first draft doesn’t necessarily indicate anything about the parties’ relative negotiating power and may speak more to the fact that the lawyers representing the sellers might have greater expertise in this particular kind of transaction.
LinkedIn hired Wilson Sonsini partners Martin W. Korman, Bradley L. Finkelstein and Douglas K. Schnell, based in Palo Alto. The recent deals for Korman and Finkelstein both include the 2015 Lynda.com acquisition, while Schnell’s deal list includes the JF Lehman acquisition of API Technologies from February 2016.
Simpson Thacher M&A Co-Head Alan M. Klein and his partner Anthony F. Vernace represented Microsoft, the buyer, in the LinkedIn acquisition.
Wilson Sonsini did not respond to a request for comment and Klein declined to comment.
Of all Wilson Sonsini’s prior deals, the language in the Microsoft-LinkedIn agreement bore the most resemblance to the API Technologies deal in February.
The Draft Analyzer analysis also identified some unique contract language in the agreement. For example, the agreement’s provision on the disclosure letter contains language that appears only in one other document filed on EDGAR, the 2015 acquisition of Misfit, Inc. by Fossil Group, Inc.
The section dealing with privacy and data security reflects a new trend to separate these issues from other representations. Only about 143 deals since 2005 have stand-alone data security sections, according to the Bloomberg Law Corporate Transactions’ Precedent Database, and there is no consensus for drafting the representation. That’s out of a total of some 369,000 transactions during that same period.
The merger agreement also includes a fresh approach on target director indemnification, including a provision that uses an independent attorney to make determinations about director conduct. The language appears in only four publicly disclosed transactions: the Vista acquisition of Tibco in 2014, and of Marketo, and Cvent in 2016, plus the JF Lehman acquisition of API Technologies in 2016.
The deal was big, even for Microsoft, according to an analysis of prior deals by both companies using Bloomberg Law: M&A Analytics. Of 270 deals since 1992, the LinkedIn acquisition is three times larger than the next largest of Microsoft’s deals – other than the $42.25 billion proposed acquisition of Yahoo! in 2008, which did not close. The runners up are Skype ($8.5 billion) in 2011, Nokia ($7.17 billion) in 2013 and aQuantive ($5.46 billion) in 2007.
For LinkedIn, M&A Analytics shows seventeen deals since 2010 with the largest being Lynda.com ($1.5 billion) in 2010, Bizo ($175 million) and Bright Media ($120 million) in 2014, Slideshare ($118.75 million) in 2012 and Connectifier ($105.5 million) in 2016.
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