Monthly Archives: March 2019

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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Court awards business seller $441K in preclosing tax refunds

Introduction It is often common when selling your company to prorate any tax refunds that relate to the preclosing. Often the buyer of the company will agree to pay to the seller any such tax refunds that the target company

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Business Seller’s Nondisclosure of Customer Problems Cost $4.4 Million

Introduction A buyer of a company often prices the target based upon some multiple of earnings. And a key assumption in its pricing model is often the stability of the target’s relationship with its key customers. So, a buyer will

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Buying a Distressed Business in Bankruptcy Free of Union Costs

Introduction Buying a distressed business is risky. Even an asset buyer can get stuck with a distressed company’s liabilities under certain federal and state laws, such as the bankruptcy laws. The coal industry is a current poster child for distressed

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Employment Contract Forces Business Seller into Arbitration with Buyer

Introduction A buyer of a business often wants the seller’s owner to stay on after the closing. So, buyer and seller’s owner sign a separate employment agreement at the closing. This is in addition to the deal’s purchase agreement signed

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