Compass Lexecon Client Desktop Metal Prevails in Broken Deal Litigation

On July 2, 2024, Nano Dimensions (Nano) entered into a merger agreement (the Merger Agreement) to acquire Desktop Metal, Inc. (Desktop), which provides additive manufacturing solutions, including 3D printers, materials, and software. The transaction was expected to close by or before an extended deadline of March 31, 2025.

In December 2024, Desktop filed a lawsuit against Nano alleging that the company had breached its obligation to use reasonable best efforts to obtain regulatory approval to close the transaction. Nano filed a counterclaim alleging that Desktop had breached the Merger Agreement by, among other things, managing working capital in ways that violated an ordinary course covenant.

Yvette Austin, Chair of Compass Lexecon’s Global Finance Practice, was retained by counsel for Desktop to provide expert testimony regarding Nano’s counterclaims. Over the course of an expedited two-day trial in March 2025, Ms. Austin testified that Desktop’s cash management and working capital practices were consistent with the company’s historical business practices.

Jonathan Foster, a Senior Consultant at Compass Lexecon and the Founder and Managing Partner of Current Capital Partners, was also retained by counsel for Desktop to evaluate whether the terms of a “bridge loan” Nano agreed to provide to Desktop were consistent with custom and practice. Mr. Foster submitted an expert report and opined that the proposed terms were not consistent with custom and practice when a lender has already determined to extend credit.

On March 24, 2025, Chancellor Kathaleen Saint Jude McCormick of the Delaware Court of Chancery ruled in favor of Desktop and rejected Nano’s counterclaim, requiring Nano to complete the $180 million acquisition. In the ruling, Chancellor McCormick cited to the testimony of Ms. Austin multiple times, finding her opinions persuasive, and adopting her analysis comparing Desktop’s pre- and post-signing business practices. Chancellor McCormick also cited Mr. Foster’s opinion that the loan terms were not “customary for facilities of this type” and that it was unusual that a lender would demand such terms after having extended credit.

Ms. Austin was supported by a team led by Vera Liang and Jennifer Milliron. Mr. Foster was supported by Todd Kendall, Avisheh Mohsenin, and Heidi Luu. Compass Lexecon worked with counsel from Quinn Emanuel Urquhart & Sullivan, LLP, including Michael A. Barlow, Veronica B. Bartholomew, Michael B. Carlinsky, Andrew J. Rossmann, Christopher D. Kercher, Jesse A. Bernstein, Peter H. Fountain, Kaitlin P. Sheehan, Heather K. Christenson, Jonathan E. Feder and Jianjian Ye, who successfully represented Desktop.