The #MeToo Movement Migrates to M&A Boilerplate
abstract. In the #MeToo era, companies pay for unchecked sexual harassment with plummeting stock prices. Corporate lawyers have addressed this liability by developing the #MeToo clause in mergers-and-acquisitions (M&A) agreements. The #MeToo clause generally represents that, to a target company’s knowledge, senior employees have not been subject to allegations of sexual harassment. This Note explains the clause’s creation and evaluates its significance based on an original analysis of public filings and interviews with practitioners. It argues that the clause is a form of reactive M&A growth uniquely rooted in a movement driven by women of color rather than a temporary response to a one-off event. As a result, the clause is likely a permanent addition to M&A boilerplate. Moreover, this Note argues that the clause should not be viewed as an intentional effort by the M&A industry to curb sexual harassment, but rather as a tool to protect shareholder wealth and decrease shareholder risk. Nonetheless, it has the potential to improve antiharassment mechanisms in the workplace. Finally, this Note provides recommendations for shifting the clause’s focus from cataloguing incidences of sexual harassment to improving reporting channels and policies. Implementing these recommendations would ensure that the clause serves not only corporate interests, but also the #MeToo movement’s ideals.
author. Yale Law School, J.D. expected 2020; Princeton University, B.A. 2017. I am deeply grateful to Aaron Dhir for inspiring this project and for providing lasting guidance and encouragement. My heartfelt thanks go to the M&A-deal actors whose insights and candor made this Note possible. Many thanks to Julia Windemuth, Annie J. Wang, Roberta Romano, John Nann, students in Professor Dhir’s Fall 2018 “Diversity and the Corporation” seminar, and students in the Yale Law Journal’s 2019 Fall Work Week Note discussion group. Finally, thank you to Lynette Lim, Briana Clark, and Ela Leshem for providing stellar edits, and to other Yale Law Journal editors for their careful review of the piece.