October 20th, 2011 → 11:53 am
The “subprime” financial crisis that the United States has been facing since mid-2007 has had a significant impact on the economy of the country, from the most humble home-owners to the most powerful private equity funds (PEF). While mergers and acquisitions in the United States were at their highest historical level in 2007, boosted by foreign investments and the capital and credit (then) available to PEFs, the newly prevailing financial conditions in effect in the US have contributed to the failure of many acquisitions, even after the ink had dried up on contracts. In effect, many “firm” contracts seem to have turned into mere purchase options that the purchasers decided to terminate, either because the prospects of the target dimmed or the financing of the acquisition turned out to be more complex than initially contemplated.
Revue de Droit des Affaires Internationales