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…
Monthly Archives: March 2019
Court awards business seller $441K in preclosing tax refunds
Posted in purchase agreement Tagged with: court reformation of contract, mutual mistake, preclosing tax refunds, proration of taxes, typo
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…
Posted in purchase agreement Tagged with: customer representation and warranty, federal securities fraud, key customers, reasonable reliance
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…
Posted in purchase agreement Tagged with: bankruptcy sale, sale of distressed business, union liabilities
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…
Posted in purchase agreement Tagged with: arbitration clause, earnout, employment agreement included in purchase agreement
Court finds wealth manager did not solicit his sold company’s clients
Introduction Buying certain personal service businesses presents challenges unlike buying a manufacturer of widgets. The value in a personal service business may depend upon the relationship the owner has with his sold company’s customers. Thus, the buyer risks buying a…
Posted in purchase agreement Tagged with: covenant not to compete, nonsolicitation covenant, sale of personal service company, wealth management sale
Entrepreneur: Be Fair to Your Other Owners When Selling Your Company
Introduction You started your company. As you grew you issued stock to key employees or issued stock to investors to raise capital. The company grew under your management. You are the CEO of the company, a board member, and as…
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