M&A Update: “Exclusivity” — Not As Preclusive As It Sounds?

In this issue of Kirkland M&A Update, partners David Fox and Daniel E. Wolf discuss how during the course of early-stage negotiations, exclusivity provisions are often used to protect the time and economic investment being made in the potential transaction by ensuring that the counterparty deals only with the named party for a stated period. In a recent appellate decision in the First Circuit, the court applied a surprisingly narrow reading of the scope of what appeared to be a very broad exclusivity provision, offering a cautionary note to dealmakers as they draft such terms.