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In high-profile deals involving U.S. public targets and stock as a component of the consideration (including, but not limited to, those deals described by the parties as “mergers of equals”), a number of different governance structures, involving varying degrees of “power sharing,” are used to address social issues that arise between the combining companies. This memorandum seeks to explore trends related to such governance structures in transactions with a value above $1 billion announced within the last twenty years, in particular with respect to transactions structured as “mergers of equals.”

True “power sharing,” which is rarely observed, results when a target and acquirer’s CEOs equally share power, serving as co-CEOs of the combined company. However, where the parties determine there is a need for some form of “power sharing,” we more typically see various forms of modified “power sharing,” the most prevalent of which is when the positions of CEO and Chair are split between the parties. A less common variation of modified “power sharing” is where the parties agree to share power chronologically with a defined succession provision, pursuant to which representation in the combined company’s leadership structure is split between the parties for specified periods of time. One interesting phenomenon that we occasionally observe is where the target CEO assumes a greater role than the acquirer CEO in the combined company.

While the memorandum highlights certain instances of “power sharing” strategies employed in recent transactions, the annexes provide a full accounting of the transactions we reviewed in the course of drafting this memorandum. Annex A provides details of self-described “mergers of equals” transactions and the “power sharing” techniques present in each. Annex B provides an overview of how social issues have been addressed in many of the largest deals (whether or not described as “mergers of equals”) where stock was a component of consideration, both parties were public, and the target was a U.S. Company.