Source: 'Reps and Warranties' Slow Cygnus Deal

Transaction not believed to be in jeopardy.

By Tony Silber
09/04/2008

A lot of the coverage of impending mergers and acquisitions is speculative. Nothing is official and confirmed, until it is. Still, the magazine industry is a pretty small place, and people who talk to the press often know people who know things.

Such is the case with the much-talked-about attempted sale of Cygnus Business Media by owner ABRY Partners. Since co-CEOs Carr Davis and Tony O'Brien announced a couple of months ago that they were approached about a sale and would pursue it, the process has generated a lot of interest, partly because of the internal drama at Cygnus and partly because it would represent a major successful transaction in a slow year for M&A.

Last month, credible sources indicated that an agreement has been reached with Wasserstein and Co., which owns Penton Media among other holdings. The deal was said to have been set to close by the end of August.

Today, a knowledgeable industry source told FOLIO: that the delay is related to a hitch in "reps and warranties." Those, the source said, are the legal documents where the seller vouches for various "schedules"-contracts, ownership of assets, litigation, employee issues and more.

"You have to represent that they're accurate and disclose all," the source said. "Maybe it's what's on the schedule and the strength of the representation. It is a guarantee or is it, ‘To the best of my knowledge.'"

The source said that if the snag was a threat to kill the deal, it would have been killed already.