188 InManagersWeTrust
The Last Frontier: Information
A practical barrier to cross-border deals has been yielding. It con-
cerns the nature and amount of available information regarding a
counterparty. In market model countries such as the United States
and the United Kingdom, a wealth of information is available con-
cerning the targets organized therein. These countries tend to op-
erate systems of public recordation for real as well as intellectual
property. Well-developed securities and mergers and acquisitions
(M&A) industries strengthen such an information culture.
Buyers and sellers in M&A transactions understand the need for
information to allow proper valuations and the need for contractual
protection to preserve confidentiality. Sellers customarily meet these
needs by executing confidentiality agreements early in the explora-
tion process and providing the buyer with substantial proprietary
data before discussing agreements any further.
The culture in European and Asian countries contrasts remark-
ably with that of the U.S./U.K. market model. Access to property
records is limited, and information is more jealously guarded. Sellers
are reluctant to share information with a potential buyer who can
wal kaway from a deal if she doesn’t li ke what she sees; confidenti-
ality agreements that protect such a seller in the United States and
the United Kingdom simply don’t do the trick. That may be sensible,
since a less well-developed system of legal enforcement for such
agreements justifies a seller’s apprehension about a buyer’s confi-
dentiality.
Cultural disparities became acute in the Vodafone-Mannesmann
battle. Mannesmann sued Vodaphone’s adviser, Goldman Sachs, in
a U.K. court, trying to prevent it from advising Vodaphone on the
grounds that Goldman had previously represented Mannesmann and
possessed confidential information about it. The British court dis-
missed the lawsuit after a brief hearing and in a short time, basically
telling Mannesmann that its claim was frivolous.
Substantively, the type of information understood as relevant also
varies between the models. In the market model and especially in
the United States, disclosing potential environmental or retiree lia-
bilities is a time-honored practice. Other countries have only re-
cently developed environmental regulation. Also, other countries tra-
ditionally rely more heavily on public social security systems,
removing private plans from center stage (even in countries such as
Germany, where such liabilities are often substantial and unfunded).