This class, with Newcomb Stillwell, Ed Black and Patrick Murphy of Ropes & Gray LLP, was a whirlwind tour of the Net-related issues that arise in the context of a complex M&A transaction. This M&A example rounds out our three types of scenarios in which the global nature of the Net comes into play (contracts, business models, and mergers & acquisitions; not meant to be exclusive but rather examples of transactions and client queries to Net lawyers).
They took us through the acquisition by KB Toys and their lead investor, Bain Capital, of eToys after the fall of eToys’ fortunes. Though the dollar figure of the investment, coming out of bankruptcy, was modest by Bain Capital standards, the transaction was highly complex. The deal was structured as an asset purchase, which Mr. Stillwell explained in the context of other possible options for such a deal. Some of the issues that arose, which are detailed nicely in the slide presentation:
* The transfer of the intangible assets of eToys: names, marks, URL, customer and supplier relationships, etc.
* The data privacy problem: what to do about all the eToys’ customer information?
* The license transfer issues: how can you ensure that licensors deal with you as a successor in interest to the licensee? How does the bankruptcy factor into this problem?
* The Net politics problem: the European creative artists known as eToy objected to elements of the transactions and to eToys generally, causing some real — though occasionally very amusing (see Slashdot on the subject) — issues.