Series 79 practice questionhardDeal Protections
A merger agreement includes a no-shop clause with a fiduciary out and a breakup fee equal to 4% of equity value. The target receives a superior proposal one week before closing. Under Delaware law, which of the following best describes how the board should proceed?
- AReject the proposal due to the no-shop clause
- BAccept the superior proposal but refuse to pay the breakup fee
- CWaive the breakup fee if the board determines the new proposal is superior
- DConsider it if fiduciary duty requires, then pay the breakup fee✓ Correct answer
Explanation
Why D — Consider it if fiduciary duty requires, then pay the breakup fee
The board must consider superior proposals if required by fiduciary duty, even with a no-shop clause. The breakup fee is typically payable in this scenario, so disregarding the new offer could risk breaching fiduciary duty.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related M&A, Tender Offers & Restructuring questions
- An acquisition agreement contains a $3 million indemnity basket and a $15 million indemnity cap. After closing, the…
- Which is a major advantage of an asset purchase for a buyer compared to a stock purchase?
- In a reverse triangular merger, which entity survives as a subsidiary post-transaction?
- A reverse merger is best characterized as a transaction in which:
- A bring-down condition in an acquisition agreement requires that representations and warranties be accurate as of which…
- As of 2026, what is the approximate HSR size-of-transaction threshold?
- Which party is responsible for filing Schedule 14D-9 in connection with a tender offer?
- According to standard industry practices, which of the following is typically disclosed in a fairness opinion letter?