Monthly Archives: March 2019

Buyer Halts Payments, Alleges Inaccurate Financials in M&A Deal

Explore a case where a buyer halted payments in an M&A deal due to alleged financial inaccuracies, and learn about offset provisions in purchase agreements. M&A Stories March 29, 2019 Introduction: In the world of mergers and acquisitions, uncertainties loom

Posted in asset purchase agreement, financial representation and warranty, membership interest purchase agreement, offset or setoff provision, offset right, promissory note, representations and warranties Tagged with: , , , , , , , , , , , ,

Buyer Misses Merger Deadline, Faces $126 Million Breakup Fee Battle

Explore a legal battle over a $126.5 million reverse breakup fee resulting from a missed merger deadline. Delve into the complexities of M&A agreements and antitrust issues. M&A Stories March 28, 2019 Introduction: In the world of business acquisitions, sellers

Posted in extension of closing, implied covenant of good faith and fair dealing, merger, reverse termination or breakup fee, termination of M&A agreement, termination or breakup fee Tagged with: , , , , , , , , , ,

S Corp Stock Seller Can Sue Buyer for Not Closing Tax Books Mid-year

M&A Stories March 27, 2019 Introduction An S corporation does not pay federal corporate income tax. The S corporation passes its income, deductions and credits through to its shareholders, in proportion to their ownership interest in the S corporation. The

Posted in allocation of preclosing taxes refunds and credits, boilerplate provisions, further assurance provision, Internal Revenue Code Section 1377 election, purchase agreement, stock purchase agreement Tagged with: , , ,

Asset Purchase Agreement Shields Buyer from Seller Employee Claim

Introduction You want to buy an existing business. You select your target business, a purchase price and payment terms. Now what? You talk to your accountant, lawyer or other adviser about how to do the deal. Your adviser asks you

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Shareholders Claim Buyer Forced Distressed Business into Bankruptcy

Introduction Buying a distressed competitor may be a smart business move.  However, the means used to buy the business can have legal consequences. The deal This case involved a distressed Texas based glove maker that was a formerly a public

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Seller Did Not Need Company Landlord’s Consent to Stock Deal

Introduction Real estate can be a major asset in a company. It is very common for a company to lease their offices, stores, manufacturing facilities and distribution centers. A buyer usually wants to use the company’s real estate. If buying

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Buyer Bought Target Employee’s Non-compete in Merger

Introduction A company’s relationship with its employees may be the crown jewel of the business. Often these relationships are evidenced by employment agreements which contain some form of post-employment nonsolicitation and non-competition covenants. Such provisions may not be enforceable in

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Buyer Sues Business Seller for Bad Accounts Receivable

Introduction One of the problem assets in an acquisition can be the seller’s accounts receivable. A buyer may want to manage the risk of bad receivables by providing for a post-closing adjustment to the purchase price. The deal This case

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Buyer Loses $21.6 Million Claim for Business Seller’s Exclusivity Breach

Introduction One of the first documents that is often signed between a seller of a privately-owned business and a prospective buyer is a letter of intent. That document has a nonbinding description of the key terms of a business sale.

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Court Gives Pharmacy Seller Chance to Collect Earnout

Introduction A prospective buyer and seller of a business often can’t agree upon a purchase price. One way to bridge the gap is to break down the purchase price into two pieces. A fixed amount and a contingent amount based

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