1、PANORAMICFINANCIAL SERVICES M&AUSALEXOLOGYFinancial Services M&AContributing EditorMinh Van NgoCravath,Swaine&Moore LLPGenerated on:February 9,2024The information contained in this report is indicative only.Law Business Research is not responsible for any actions(or lack thereof)taken as a result of

2、 relying on or in any way using information contained in this report and in no event shall be liable for any damages resulting from reliance on or use of this information.?Copyright 2006-2024 Law Business ResearchExplore on LexologyContentsFinancial Services M&AMARKET AND POLICY CLIMATEMarket climat

3、eGovernment policyLEGAL AND REGULATORY FRAMEWORKLegislationRegulatory consents and OlingsDwnership restrictionsirectors and obcers F restrictionsirectors and obcers F liaTilities and legal dutiesforeign investmentCompetition law and merger controlDEAL STRUCTURES AND STRATEGIC CONSIDERATIONSCommon st

4、ructuresxime Eramexa-jSG and puTlic relationsPolitical and policy risksShareholder activismxhirdIparty consents and notiOcations DUE DILIGENCE Legal due diligenceDther due diligencejmerging technologiesPRICING AND FINANCINGPricingPurchase price adustmentsfinancingDEAL TERMSRepresentations and warran

5、ties.ndemnitiesClosing conditions.nterim operating covenantsDISPUTESFinancial Services M&A 2024Explore on LexologyCommon claims and remediesispute resolutionUPDATE AND TRENDSxrends,recent developments and outlookFinancial Services M&A 2024Explore on LexologyRETURN TO CONTENTSContributorsUSACravath,S

6、waine&Moore LLPMinh Van NgomngoHcravathAcomFinancial Services M&A 2024Explore on LexologyRETURN TO CONTENTSMARKET AND POLICY CLIMATEMarket climate?ow would you descriTe the current market climate Eor M&W activity in the Onancial services sector in your urisdictionq The market climate for,nancial ser

7、vices M&A continues to be active3 although in 2022 and 2021 it did not reach the record high levels seen in 202:and 2020.Consolidation is not only driven by the usual catalysts3 such as scale and e;ciency3 but also by two increasingly important strategic dynamics$many incumbent,nancial players are t

8、rying to introduce the right products and services for their consumer baseq and there is emerging a transition during which traditional,nancial service companies are exploring and expanding their product and service offerings to pre-empt entry by non-traditional companies.Re5ecting less favourable m

9、arket conditions3 including rising in5ation(plus associated rising interest rates)and expectations for a recession3 US,nancial services M&A slowed in 20213 totalling approximately 9:06 billion in e8uity value3 a decrease of approximately 60 per cent from 2022.The number of completed deals fell from

10、630760 in 2022 to approximately 2366D in 2021.As of year-end3 there were 1Jj deals still pending3 totalling approximately 96j billion in e8uity value.US bank M&A activity also fell in 20213 with approximately 9:.7 billion of completed deals3 a 61 per cent drop compared to the prior year.As of year-e

11、nd3 21 deals were completed3 a drop of approximately 66 per cent from 6j in 2022.There are 44 deals totalling approximately 9:J billion that have been announced but did not close as of year-end.The political and regulatory environment for,nancial services M&A3 and M&A for large banking organisations

12、 in particular3 may create some headwinds leading into 2024.For example3 the administration of President Biden3 generally speaking3 is seeking more robust enforcement of antitrust laws3 which may deter or present challenges for some deals.In the banking sector3 the federal banking agencies are re-ev

13、aluating the standards that are used to review bank mergers3 in light of signi,cant changes to the competitive landscape for banks since the merger guidelines were adopted decades ago.This follows the OH Antitrust ivision announcement in the fourth 8uarter of 202:that it was seeking additional publi

14、c comments on whether and how the division should revise the:DD7 Bank Merger Competitive Review Guidelines.As a result3 there may be some period of uncertainty regarding the standards that need to be met for a transaction to receive regulatory approval3 and that uncertainty may deter or delay some d

15、eals.Notwithstanding the current headwinds3 we expect consolidation in the sector to continue.Among other things3 lowered valuations could make certain,ntech ac8uisitions more affordable3 even with the higher cost of capital and less attractive opportunities for IPOs and other exit options in the cu

16、rrent environment.Law stated-15 January 2024Government policy?ow would you descriTe the general government policy towards regulating M&W activity in the Onancial services sectorq?ow has this policy Teen implemented in practiceqFinancial Services M&A 2024Explore on LexologyRETURN TO CONTENTSFinancial

17、 services M&A3 and in particular M&A by large banking organisations3 is highly regulated.etermining whether any particular transaction is subect to a regulatory approval re8uirement re8uires analysing the facts about that particular transaction3 such as the identity and activities of the buyer and t

18、arget.The administration of President Biden has signalled a more stringent approach to competition reviews of M&A generally3 and the federal banking agencies also have indicated they are reviewing their merger review standards more generally(eg3 all factors that govern merger approvals3 not ust comp

19、etition).As a result3 there may be some period of uncertainty regarding the standards that need to be met for a transaction to receive regulatory approval3 and that uncertainty may deter or delay some deals.Law stated-15 January 2024LEGAL AND REGULATORY FRAMEWORKLegislation(hat primary laws govern O

20、nancial services M&W transactions in your urisdictionqLaws that govern,nancial services M&A include$W The Bank zolding Company ActqW The Bank Merger ActqW The Change in Bank Control ActqW The zome Owners Loan ActqW The Securities Exchange ActqW The Investment Advisers ActqW The Investment Company Ac

21、tqW The zart-Scott-Rodino Antitrust Improvements ActqW state banking lawsq andW state lending3 money transmitter3 trust and similar laws.Law stated-15 January 2024Regulatory consents and lings(hat regulatory consents,notiOcations and Olings are re)uired Eor a Onancial services M&W transactionq Shoul

22、d the parties anticipate any typical Onancial,social or other concessionsq Regulatory notices or approvals may be re8uired for M&A involving insured depository institutions3 depository institution holding companies3 investment advisers3 broker-dealers and entities holding certain state licences3 suc

23、h as state lending licences.hether any particular transaction re8uires approval will depend on the nature of the buyer and target and the structure of the transaction.Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSLaw stated-15 January 2024Ownership restrictionsWre there any restric

24、tions on the types oE entities and individuals that can wholly or partly own Onancial institutions in your urisdictionq Generally speaking3 there are no restrictions on the types of entities and individuals that can wholly or partly own,nancial institutions in the United States.zowever3 in many case

25、s the regulatory application process for a transaction re8uires signi,cant shareholders3 o;cers or directors to submit background check materials to the relevant regulator3 including materials for a background check and to verify the,nancial wherewithal of the applicant.An applicant could be dis8ual

26、i,ed based on the results of such a background check.For example3 an individual with a history of personal bankruptcy or who was an executive of a company that became insolvent may face challenges in obtaining approval to be a signi,cant shareholder3 o;cer or director of a target company.The same ma

27、y be the case for an individual that previously was subect to a regulatory enforcement action or was a senior executive of a company at the time the company was subect to a regulatory enforcement action.Law stated-15 January 2024Directors and ofcers j restrictionsWre there any restrictions on who ca

28、n Te a director or obcer oE a Onancial institution in your urisdictionq Generally speaking3 there are no restrictions on the types of individuals that can be directors or o;cers of,nancial institutions in the United States.zowever3 in many cases the regulatory application process for a transaction r

29、e8uires o;cers or directors to submit background check materials to the relevant regulator3 including materials for a criminal background check and to verify the,nancial wherewithal of the applicant.An applicant could be dis8uali,ed based on the results of such a background check.For example3 an ind

30、ividual with a history of personal bankruptcy or who was an executive of a company that became insolvent may face challenges in obtaining approval to be an o;cer or director of a surviving institution.The same may be the case for an individual who previously was subect to a regulatory enforcement ac

31、tion or was a senior executive of a company at the time the company was subect to a regulatory enforcement action.In addition3 directors of national banks are re8uired to be US citi?ens3 although the O;ce of the Comptroller of the Currency has some discretion to waive this re8uirement.State banking

32、laws may have similar re8uirements.Law stated-15 January 2024Directors and ofcers j liabilities and legal dutiesFinancial Services M&A 2024Explore on LexologyRETURN TO CONTENTS(hat are the primary liaTilities,legal duties and responsiTilities oE directors and obcers in the conte-t oE Onancial servic

33、es M&W transactionsqThe duties and liabilities for directors and o;cers in,nancial services M&A transactions are similar to those for most other M&A transactions$to achieve the best outcome for their constituents3 which3 in most cases3 are the shareholders.irectors also are subect to obligations und

34、er federal banking law and supervisory guidance.A director would need to meet those standards when evaluating an M&A transaction3 such as by exercising effective challenge of management and considering whether and the extent to which the transaction is consistent with the companys strategy and risk

35、tolerance.Law stated-15 January 2024Foreign investment(hat Eoreign investment restrictions and other domestic regulatory issues arise Eor ac)uirers Tased outside your urisdictionq The Committee on Foreign Investment in the United States(CFIUS)has the authority to review certain foreign investment tr

36、ansactions to determine the effect of such transactions on the national security of the United States.CFIUS can review any transaction that could result in foreign control of a US business3 certain types of non-controlling but non-passive investments by a foreign person in a US business and certain

37、real estate transactions.ith limited exceptions3,ling with CFIUS is voluntary3 although closing a transaction that is within CFIUSs urisdiction without its approval entails the risk that CFIUS subse8uently imposes conditions or3 in extreme cases3 forces a divestiture.Certain transactions that involv

38、e either a US business that deals with critical technology or a foreign investor that is substantially owned by a foreign government must be noti,ed to CFIUS at least 10 days prior to closing.CFIUS regularly reviews,nancial services M&A transactions3 particularly where the US business in 8uestion de

39、als with large amounts of sensitive personal data or is considered to be critical infrastructure.In addition3 in the United States3 there is a specialised regulatory framework that applies to foreign banking organisations.Generally3 a foreign banking organisation is any non-US entity that controls a

40、 US-insured depository institution or has a branch or agency in the United States.This framework generally does not apply US law to activities conducted outside the United States3 but in some cases there can be nuance and complexity regarding certain non-US activities that are subect to US law.In ad

41、dition3 notice to the Federal Reserve(and potentially state regulators)can be re8uired if there is a change of a control of a foreign banking organisation that has a branch or agency in the United States.Further3 in some cases3 as part of reviewing a transaction3 the Federal Reserve or other regulat

42、ors may need to analyse whether the law of the urisdiction of a foreign ac8uirer imposes consolidated comprehensive supervision or includes certain reciprocity for US,rms acting in that urisdiction.Law stated-15 January 2024Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSCompetition

43、law and merger control(hat competition law and merger control issues arise in Onancial services M&W transactions in your urisdictionq In the United States3 certain ac8uisitions by or of banking organisations re8uire banking agency prior approval and such approval includes a review of the competitive

44、 effects of the proposed transaction.If banking agency approval is not re8uired3 then a,ling with the Federal Trade Commission and the epartment of Hustice(OH)Antitrust ivision under the zart-Scott-Rodino Act(zSR Act)is re8uired.If only a portion of a transaction re8uires banking agency prior approv

45、al3 an zSR Act,ling may be re8uired for the remaining portion of the transaction.Certain transactions that re8uire banking agency approval due to the si?e of the parties in the transaction can re8uire an zSR,ling even though the transaction in its entirety is subect to prior banking agency approval.

46、Bank M&A transactions are reviewed from a competition perspective concurrently by the OH Antitrust ivision and the relevant banking agency.Generally speaking3 the OH will furnish a report to the relevant banking agency on the competitive factors regarding bank M&A transactions.The OH and the federal

47、 banking agencies have issued guidelines regarding how they evaluate bank mergers(although the OH and the federal banking agencies are currently re-evaluating their review standards3 which have not been revised for decades(:DD7 Bank Merger Competitive Review Guidelines).Applicants generally may not

48、consummate the transaction within:7 days of receiving the banking agencys approvalq if the OH has provided adverse comments3 that waiting period can be extended to allow the OH time to exercise its authority.In addition3 state banking agencies often re8uire prior approval or notice of transactions a

49、ffecting regulated institutions within their urisdiction.Financial services transactions outside of the banking sector generally are subect to the zSR Act process.Law stated-15 January 2024DEAL STRUCTURES AND STRATEGIC CONSIDERATIONSCommon structures(hat structures are commonly used Eor Onancial ser

50、vices M&W transactions in your urisdictionqFor public companies3 the structures commonly used are mergers3 tender offers or asset sales.Tender offers are theoretically faster than the merger process but the time frame is driven by the that for obtaining regulatory approval?which will depend on each

51、particular company3 but generally will take three months or longer.In a merger3 the risk of an interloper bid is eliminated once the target holds a shareholder vote.This risk persists until closing for a tender offer.Asset sales may provide more 5exibility in terms of what assets are desired and wha

52、t liabilities to leave behind for any particular transaction.zowever3 asset sales may also re8uire more third-party consents than a merger or tender offer.For private companies3 the structures commonly used are mergers3 stock purchases or asset sales.The advantage of stock purchases is that they giv

53、e rise to direct contractual privity between the buyer and selling shareholders3 and also more commonly include indemni,cation rights.zowever3 one consideration to a stock purchase is that every shareholder must sign up for the deal3 which could be di;cult to achieve for target companies with a broa

54、d shareholder base.Private mergers do not give rise to direct Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSprivity between the ac8uiror and the targets shareholders3 but generally only re8uire that shareholders representing a maority of the voting interests of the target support t

55、he merger(the approval threshold may be higher depending on state law or the target).Law stated-15 January 2024Time?rame(hat is the typical time Erame Eor Onancial services M&W transactionsq(hat Eactors tend to aEEect the timingq Generally speaking3 under normal circumstances3 a transaction involvin

56、g review by a banking agency re8uires several months to obtain approval.Statistics published by the Federal Reserve state that the average processing time for M&A proposals is over 60 days and the median time is 46 days.If the proposal receives adverse public comments3 the average processing time um

57、ps to 21D days.The OH Antitrust ivision and banking agencies are undertaking a re-evaluation of their merger review standards(:DD7 Bank Merger Competitive Review Guidelines).As a result of this review3 processing times may exceed historical averages3 both because of the uncertainty created by the re

58、-evaluation and because the staff may take longer to review transactions under new standards(once adopted).A change of control application for a broker-dealer must be submitted to the Financial Industry Regulatory Authority(FINRA)at least 10 days prior to closing of a transaction.Technically3 a tran

59、saction may close after this 10-day period has expired3 provided that FINRA has neither reected the application nor prohibited the transaction from closing.Closing a transaction prior to obtaining approval3 however3 entails the risk that FINRA subse8uently imposes conditions or reects the applicatio

60、n.Law stated-15 January 2024Tax(hat ta-issues arise in Onancial services M&W transactions in your urisdictionq xo what e-tent do these typically drive structuring considerationsq There are several tax issues particular to,nancial services M&A that can affect structuring.First3 domestic tax-free roll

61、over transactions often re8uire the target bank to be initially situated as a,rst-tier subsidiary of the ac8uiror3 and subse8uent repositioning of the target bank(which usually is permissible for tax purposes)is sometimes problematic under the relevant banking laws.Second3 taxable ac8uisitions of US

62、,nancial institutions by non-US ac8uirors often are accompanied by the introduction of intercompany debt3 which usually is permissible for tax purposes but is sometimes problematic under the banking law re8uirements applicable to intermediate holding companies.Third3 banks often hold material amount

63、s of tax-advantaged life insurance on their executives3 and the merger of a target bank into an ac8uiror bank can undo those tax advantages if not structured properly.Finally3 the tax information reporting re8uired of,nancial institutions is often 8uite onerous3 and ac8uirors in carve-out transactio

64、ns may need to craft special indemnities for post-closing reliance on target reporting systems pending the ability to integrate(and re-verify)customer data.Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSLaw stated-15 January 2024ESG and public relations?ow do the parties address the

65、 wider puTlic relations issues in Onancial services M&W transactions q.s environmental,social and governance?jSG?a signiOcant Eactorq In the context of transactions that re8uire banking agency review3 there is no explicit review of ESG factors.zowever3 the banking agencies could take the position in

66、 the future that they have the authority to consider ESG factors.For example3 one of the factors the agencies are re8uired to consider is the convenience and needs of the community to be served.zistorically this factor has been analysed by reference to the ac8uirors performance record in meeting its

67、 Community Reinvestment Act obligations.zowever3 it is feasible for the banking agencies to take into account a wider range of considerations when analysing this factor.Moreover3 it may be necessary to address ESG factors to build public support for a transaction from shareholders and other stakehol

68、ders.For example3 to avoid attracting adverse public comments on an application for a banking organisation transaction3 community groups and other public interest groups may seek to have the ac8uiror make certain ESG commitments.A failure to make those commitments could lead to adverse public commen

69、ts on the application3 which can delay or derail an approval process.In addition3 recent applications and public statements by staff suggest that US bank regulators may be more focused on the impact of a transaction on the?convenience and needs of the community to be served by the combined organisat

70、ion when evaluating bank mergers.Law stated-15 January 2024Political and policy risks?ow do the parties address political and policy risks in Onancial services M&W transactionsqPolitical and policy risks are largely addressed through the contractual standard that governs the level of efforts the ac8

71、uiror must apply to obtain regulatory clearance.For example3 an ac8uiror may be re8uired to apply reasonable best efforts3 with this term de,ned to exclude any actions that have a material adverse effect on the assets or,nancial condition of the ac8uiror or the target business.This standard can be a

72、dusted to allocate risk between the parties.As an example3 the ac8uiror could be re8uired to take any and all actions necessary to receive regulatory clearance3 irrespective of the effect those actions would have on the ac8uiror or target business.Another way that political and policy risks are mana

73、ged is through the material adverse effect(MAE)provisions in the agreement and through closing conditions.For example3 MAE provisions3 which are linked to closing3 often carve out changes in law.Thus3 a change in law would not3 on its own3 be su;cient for an MAE to occur3 such that closing condition

74、s are not met.In addition3 transactions typically have an?outside date3 by which all closing conditions must be met3 including obtaining regulatory Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSclearance.If regulatory clearance is not obtained by such date3 the parties would not be

75、 re8uired to close.In this way3 the outside date can shift the risk of a delayed regulatory review processing to the seller.Law stated-15 January 2024Shareholder activism?ow prevalent is shareholder activism in Onancial services M&W transactions in your urisdictionqThere has not been a substantial c

76、hange in the prevalence of shareholder activism in,nancial services M&A in the United States.Outside of,nance3 activist investors have been increasingly targeting technology3 media and telecom3 healthcare3 and energy minerals companies.The overall number of activist campaigns in 2021 was consistent

77、with levels in 2022.Law stated-15 January 2024Third-party consents and notications(hat thirdIparty consents and notiOcations are re)uired Eor a Onancial services M&W transaction in your urisdictionqIn an asset sale3 third-party consents may be triggered to assign contracts.In a stock sale or merger3

78、 there may be contracts with anti-change of control provisions3 but this is generally less common than anti-assignment provisions.Law stated-15 January 2024DUE DILIGENCE Legal due diligence(hat legal due diligence is re)uired Eor Onancial services M&W transactionsq(hat specialists are typically invo

79、lvedq Legal due diligence for,nancial services M&A transactions is similar to due diligence for all other transactions3 with incremental diligence to address regulatory compliance issues.Specialists that help with regulatory compliance diligence include experts in bank3 securities3 asset management

80、and digital asset regulation.In the context of banking organisations3 regulatory diligence is important to help ensure that the target does not face any issues that would imperil regulatory clearance of the proposed transaction.hen conducting due diligence with respect to a banking organisation3 it

81、is important to be sensitive to restrictions on the sharing of con,dential supervisory information(CSI).CSI includes exam reports and other communications between a banking organisation and its bank regulator.This material may not be shared with a third party3 subect to limited exceptions or the app

82、roval of the relevant regulator.Sharing with a potential transaction counterparty is not such an exception and the regulators typically would not provide approval for sharing CSI with such a party.As Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSa result3 the parties need to work c

83、ollaboratively for the ac8uiror to be able to understand the business and its regulatory posture without sharing CSI.Law stated-15 January 2024Other due diligence(hat other material due diligence is re)uired or advised Eor Onancial services M&W transactionsq For,nancial services M&A transactions3 cy

84、bersecurity and data privacy have become priority diligence issues.In addition3 for technology-related companies3 it is important to perform diligence on the actual business conducted(especially as it relates to consumers and regulations).For example3 in the payments space3 whether the target is a m

85、erchant of record is an important fact that can give rise to issues depending on the circumstance.Law stated-15 January 2024Emerging technologiesWre there speciOc emerging technologies or practices that re)uire additional diligenceqYes3 blockchain and cryptoasset activities re8uire speci,c diligence

86、 to help ensure that the ac8uisition and activities of the target are permissible for the ac8uiror and that the target is conducting the activities in compliance with applicable regulations and with due regard for data privacy and intellectual property standards.In addition3 because of the novelty o

87、f cryptoasset-related activities3 it may be necessary to con,rm whether the target has been resolving legal ambiguities consistent with the ac8uirors risk appetite3 and more generally has been applying risk management practices consistent with the ac8uirors standards and any supervisory expectations

88、 of the ac8uirors regulators.The due diligence for cryptoasset activities3 therefore3 involves business due diligence3 risk and operational diligence and legal diligence.Prior notice to3 and approval of3 the ac8uirors or targets regulator(or both)may be re8uired.Law stated-15 January 2024PRICING AND

89、 FINANCINGPricing?ow are targets priced in Onancial services M&W transactionsq(hat Eactors typically aEEect valuationqIn,nancial services M&A transactions3 the pricing depends on the target.For bank deals3 value is often expressed by the ratio of the price to tangible book value.For branch deals3 va

90、lue may be expressed as a premium to deposits assumed by the buyer.For,nancial technology companies or,nancial services companies3 often the pricing will involve a Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSmultiple on revenue or EBITA.For whole bank ac8uisitions3 pricing will t

91、ypically include a multiple on the tangible book value.Law stated-15 January 2024Purchase price ad?ustments(hat purchase price adustments are typical in Onancial services M&W transactionsqEarn-outs may be available as a way to bridge valuation gaps.For traditional bank deals3 there is typically a ne

92、t asset adustment.For many deals3 there may be a traditional working capital adustment.Law stated-15 January 2024Financing?ow are ac)uisitions typically Onancedq Wre there any notaTle regulatory issues aEEecting the choice oE Onancing arrangementsqBank deals have limits on their ability to incur deb

93、t due to regulatory ratios.Any debt must be within certain limits pursuant to applicable regulatory guidance or rules.Otherwise3 consistent with other industries3 debt,nancing may be accomplished through debt commitment obligations at signing that ensure the re8uired debt will be available at closin

94、g.Law stated-15 January 2024DEAL TERMSRepresentations and warranties(hat representations and warranties are typically made Ty the target in Onancial services M&W transactionsq Wre any areas usually covered in greater detail than in general M&W transactionsqFor,nancial services deals3 targets are exp

95、ected to make customary representations.In addition3 there has been signi,cant focus on representations with regard to compliance with laws and regulations such as the Foreign Corrupt Practices Act of:Djj3 data integrity and privacy3 and intellectual property.Law stated-15 January 2024Indemnities(ha

96、t indemnities are typical Eor Onancial services M&W transactionsq(hat are typical terms Eor indemnitiesq Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSFinancial services deals have customary indemnities for breaches of representations and covenants3 customary survival periods from:

97、2 to 24 months3 and caps ranging from,ve to 20 per cent.In addition3 certain key areas of focus such as compliance with laws and regulations3 intellectual property3 data integrity and privacy may have longer indemnity durations(such as,ve years or a statute of limitations)and a higher cap ranging fr

98、om 10 to 40 per cent of the purchase price.As with other industries3 the use of representation and warranties insurance has become popular in,nancial services M&A3 but the parties should be attentive to exclusions in the representations and warranties insurance that are speci,c to,nancial services i

99、ndustries(eg3 exclusions for cybersecurity).Law stated-15 January 2024Closing conditions(hat closing conditions are common in Onancial services M&W transactionsq For ac8uisitions of banking organisations or broker-dealers3 a common closing condition may be regulatory approval.For ac8uisitions of inv

100、estment advisers3 a common closing condition may be client consents and there also may be closing conditions related to minimum assets under management.Law stated-15 January 2024Interim operating covenants(hat sectorIspeciOc interim operating covenants and other covenants are usually included to cov

101、er the period Tetween signing and closing oE a Onancial services M&W transactionq Transactions involving banking organisations may have interim operating covenants regarding making loans to certain borrowers(such as loans that would present single counterparty credit risk concern or loans that are s

102、ubect to regulatory focus due to the lack of creditworthiness of the borrower).In addition3 for depository institutions3 the typical covenant to avoid incurring debt and liens normally would include carveouts for deposit liabilities and certain wholesale borrowings.To the extent the target has parti

103、cularly important customer relationships3 the buyer may seek an interim operating covenant that limits the ability of the target to modify the terms of those relationships(an example would include important advisory clients for an investment adviser)or to introduce the buyer to those clients for pur

104、poses of integration planning.Law stated-15 January 2024DISPUTESCommon claims and remedies(hat issues commonly give rise to disputes in the course oE Onancial services M&W transactionsq(hat claims and remedies are availaTleqFinancial Services M&A 2024Explore on LexologyRETURN TO CONTENTSCommon issue

105、s that may give rise to disputes include issues around regulatory compliance3 data integrity3 and privacy and cybersecurity.Remedies differ based on the timing of the issues discovery.If issues are discovered between signing and closing3 and those issues may give rise to disagreements3 then the targ

106、et may be re8uested to take corrective action or3 if the issue is su;ciently severe3 the buyer may refuse to close.If the issue is discovered after closing and target shareholders have granted indemnity to the buyer3 then the buyers recourse will be that indemni,cation.In public M&A3 it is typical f

107、or the buyer to not have any post-closing recourse.Law stated-15 January 2024Dispute resolution?ow are disputes commonly resolved in Onancial services M&W transactionsq(hich courts are used to resolve these disputes and what procedural issues should Te Torne in mindq.s alternative dispute resolution

108、?WR?commonly usedqGenerally3 elaware and New York law3 applied by elaware and New York courts3 are the two most popular governing laws because of their maturity with respect to commercial transactions.Alternative dispute resolution is not commonly usedq instead3 it is more common to rely on the cour

109、ts3 especially in elaware and New York3 since the courts can act very 8uickly and the udges are often highly experienced in commercial law issues.Law stated-15 January 2024UPDATE AND TRENDSTrends,recent developments and outlook(hat are the most noteworthy current trends and recent developments in On

110、ancial services M&W in your urisdictionq(hat developments are e-pected in the coming yearq In the United States3 there has been a wave of recent transactions in the banking industry3 with some,rms seeking to ac8uire targets to achieve scale and other,rms(particularly non-US banks)seeking to sell ass

111、ets to align with a strategic decision about the US market.Some observers believe that even more consolidation is necessary as a matter of industrial logic3 particularly for regional banks that are on the smaller end of the si?e spectrum.At the same time3 there is increasing concern from the banking

112、 agencies and other policymakers about concentration and its effect on competition.In addition3 given the growth of cryptoasset markets3 there remains an open 8uestion of how those activities will be incorporated into the regulatory perimeter and3 for example3 whether banking organisations may seek

113、to buy cryptoasset companies rather than build the capability on their own.Over the coming year3 the banking agencies are expected to continue their re-evaluation of their merger review standards and they could implement changes to those standards.In addition3 the banking agencies may also provide m

114、ore clarity on the scope of cryptoasset activities that are permissible for regulated banking organisations.Each of these actions has the Financial Services M&A 2024Explore on LexologyRETURN TO CONTENTSpotential to have meaningful effects on the,nancial services landscape and what deals are palatable from a regulatory perspective for,rms of all si?es.Law stated-15 January 2024Financial Services M&A 2024Explore on Lexology