Will “Weinstein Clauses” Protect Companies in M&A Deals?

Katz, Marshall & Banks partner Debra Katz was quoted in a Washington Post article, “The challenge behind Wall Street’s ‘Weinstein clauses.” Companies involved in mergers and acquisitions are starting to assess the potential risks to an organization should sexual harassment scandals and controversies come to light. Investment banks and M&A advisers have begun recommending ‘Weinstein clauses’ to protect against sexual harassment claims involving a selling firm’s executives.

While such clauses “are a good idea because it puts a sharp focus on the issue,” says Ms. Katz, she doubts “it’s going to change behavior.”

EEOC studies show that 90 percent of individuals who say they have been harassed never file a complaint with the commission, and thus a due diligence process may not uncover existing harassment. Considering the high professional and personal stakes of many of these mergers and acquisitions, there may be great pressure to withhold such damaging information.

Ultimately, the goal is to not just change the incentives to prevent sexual harassment, but to improve the way women are treated in the workplace generally. “A cultural shift takes a while – it takes strong direction from management, a clear and urgent directive and really holding people accountable and putting that type of requirement at every level. That’s not a short-term proposition,” explains Ms. Katz.

Read the full story here.