Provision in LinkedIn, Microsoft agreement hints at privacy protection
Privacy has always been part of M&A due diligence and the privacy representation in the LinkedIn and Microsoft deal is "broad but succinct."
A hint as to how Microsoft and LinkedIn will protect the privacy of user data after their merger as well as a hint as to an upcoming standard for companies that go through mergers and acquisitions (M&As) might include can be found in a brief privacy representation in the agreement between the two tech giants.
"Privacy and data security protections are developing and changing rapidly, everyone does it on their own, ad hoc,” lawyer John Maloney, commercial product director of corporate and transactional at Bloomberg Law, told SCMagazine.com. “It will be interesting to see if this will set a new approach.”
The passage, said Maloney, who put the agreement through the company's Corporate Transactions technology and Draft Analyzer tool, is surprising in both its brevity and breadth. “What's unusual here is that it's pretty short and sweet,” he said. “We can't find another like it even in healthcare [agreements].”
In another break from the typical pattern, it is clear that LinkedIn's legal team exerted more influence over the wording of the passage. “The broader representation came from the target, they seemed to have more control over the language,” Maloney said, explaining "usually it's the acquirer” that takes the lead on language.
While privacy has always been important to M&A deals – J. Trevor Hughes, president and CEO of the International Association of Privacy Professionals (IAPP), told SCMagazine.com that “privacy is clearly an area of inquiry in due diligence of M&A” – Maloney said provisions for it used to fall under intellectual property. “Now they have separate protection for it.”
Not even the healthcare industry has come to a consensus as to how to handle privacy as part of an M&A agreement. “We're going to watch and see if more targets do it this way and if any issues (concerning breaches and privacy issues) will be disclosed in (accompanying) disclosure letters,” he said of the “broad but succinct” privacy representation.