Monthly Archives: June 2019

Seller Loses Earnout Suit – No Strategic Buyer Bad Faith

Introduction The Seller got past a motion for summary judgment in its gross profits earnout lawsuit against its strategic buyer. See http://www.mk-law.com/wpblog/court-gives-pharmacy-seller-chance-to-collect-earnout/ for my earlier blog about the summary judgment motion. But, although the seller won the battle, it ultimately

Posted in earn outs, implied covenant of good faith and fair dealing Tagged with: ,

Strategic Buyer’s Refusal to Sign APA Authorized by LOI

Introduction The Mississippi high court held that an LOI gave a strategic buyer the right to not sign an APA. The deal The seller started operations as a Mississippi hospice in June of 2007. The founder and owner ran it

Posted in implied covenant of good faith and fair dealing, letter of intent, nonbinding Tagged with:

Bankruptcy Court Permits 363(f) Sale of Business Free of Pension Claim

Introduction A pension plan unsuccessfully tried to stop a company from selling a business to a buyer in a 363(f) (3) sale free and clear of the seller’s pension fund liability. The deal The seller was engaged in environmental and

Posted in asset purchase agreement, bankruptcy sale, distressed business acquisitions, federal multiemployer pension plan withdrawal liability, Section 363 sale, successor liability Tagged with: , , , , ,

Lawsuit Over EBITDA Earnout “Determined in Accordance With Buyer’s Historical Reporting Policies”

Introduction This is another post-closing M&A dispute over an EBITDA earnout. The deal The seller was a San Jose based small security guard service. It sold its assets in September 2016 to a Georgia based nationwide security company with about

Posted in bad faith, corporate overhead, de facto merger exception, earn outs, EBITDA Tagged with: ,

Purchase Price Royalty for SaaS Business Didn’t Include Professional Fees

Introduction The seller’s purchase price royalty for sale of a software as a service business did not include post-closing hourly professional fees. The deal The seller is a Seattle based systems integration firm that developed a cloud-based application that lets

Posted in purchase price, royalty Tagged with: ,

APA Integration Provision and Exclusive Remedy Clause Bars Seller Claim

Introduction A seller of a mortgage service business could not sue its asset buyer in tort for negligent misrepresentation. The deal The seller was a Denver based company that was formed after the 2008 financial crisis to assess and verify

Posted in earn out, economic loss doctrine, exclusive remedy, integration clause Tagged with: , ,

Vague APA Note Payment Adjustment Provision Results in Lawsuit

Introduction This post closing asset deal dispute could not be resolved by summary judgment because the purchase money note adjustment provision was held to be an unenforceable agreement to agree. The deal The Utah based seller manufactured a garden planter

Posted in agreement to agree is unenforceable, note payment amount adjustment, promissory note, purchase price, purchase price adjustment Tagged with: , , ,

Indiana APA Choice of Law Provision Doesn’t Apply to Its Product Line Exception

Introduction Generally, a cash buyer of the assets of a business is not responsible for the defective products made by the seller, unless the buyer assumed those liabilities in the asset purchase agreement. However, California started imposing the seller’s product

Posted in choice of law provision, product line exception, successor liability Tagged with: , , , , , ,

Beer Maker May Have Liability for Denying Consent to Sale of Wholesaler’s Business

Introduction Exclusive distributor relationships with manufacturers are usually the most important assets of a distributor business. The manufacturer is usually much bigger and has most of the leverage; leading to contracts that favor the manufacturer. Also, the manufacturer is most

Posted in asset purchase agreement, Assignment, assignment of contracts, consent to assignment Tagged with: , , , ,

Owner Sells Company’s Fitness Club Assets; Fights Personal Trainer Claims

Introduction Selling your company can be very stressful for employees and contractors not picked up by the buyer. Especially those that have depended upon cash flow from you company for a long time. This creates a risk you may be

Posted in asset purchase agreement, assignment of contracts, contracts, due diligence Tagged with:

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