Indemnification Holes After a Company Is Sold

In “Indemnification Holes After a Company Is Sold,” Philadelphia partner Doug Raymond digs into indemnification provisions for executives and board members post-sale. The column marks the latest installment in his thought leadership for Directors & Boards.

Doug opens the article with a brief nod to the efficacy of a solid directors and officers (D&O) insurance policy. He then launches into two probing questions: “What happens to these layered protections when the company is sold? Can the buyer cancel the insurance and amend the bylaws?” Doug relays how these issues played out in a recent Delaware Court of Chancery case and highlights key takeaways for boards considering a sale of control, from securing adequate D&O tail coverage to educating directors on any limits buyers may seek on indemnity and advancement rights.