When times are good and there is money to be made, investors are supremely motivated to “get the deal done.” The last thing they want are lawyers mucking up the process by engaging in protracted negotiations. As a consequence, in the zeal to close, the quality of the transaction documents often take a back seat to expediency. For example, rather than risk losing the deal, one party might agree to provide the other with additional protections which are not customary in the industry. Conversely, a motivated party may forego receiving standard representations and warranties from its counter party. Time is money.
However, when the music stops and these deals turn sour, investors on both sides of the aisle will look for avenues to recapture value. Now is the time to check your transaction documents. You might be surprised to learn that your anxious counter party may have provided recourse to recover your losses.