Academic

I hustled down to Wilmington yesterday to see Steven Davidoff present his fascinating paper on why so many private equity deals collapsed when the market went south.  Didn't the targets negotiate binding contracts?  Steve showed how these deals evolved in ways that allowed the PE firms to walk and analyzed the contribution the legal market made to the failure of targets to lock in their purchases (the five repeat-playing firms in go privates largely represent the acquirer in these transactions). 

If Davidoff focused on the lawyering, Vice-Chancellor Leo Strine was particularly interested in the way that the financial institutions bankrolling the leveraged takeovers were able to get out of their commitments.  Both he and Davidoff then suggested where they thought private equity contracts might be reformed.  And both agreed that, like much else during this financial crisis, the evolving shakiness of the deal contracts was probably ignored because nothing failed until 2006, and the parties to these transactions were probably disinclined to worry about eventualities that surely wouldn't come to pass.