Monthly Archives: December 2020

Seller’s CEO Can be Sued for Not Disclosing Buyer’s Unaudited Financials in Proxy

M&A Stories December 24, 2020 Introduction An officer owes a duty of care to his or her shareholders. This fiduciary duty of an officer is especially important when the directors have asked the shareholders to approve a proposed merger. The

Posted in officer duty of care, shareholder approval of deal Tagged with: ,

Buyer Can Sue Seller of Business in Delaware for Fraud in “As Is” Deal

M&A Stories December 15, 2020 Introduction A buyer of a business usually manages unknown M&A risks by requiring the seller to provide a comprehensive set of representatives and warranties about the business. But occasionally, the buyer agrees to an “as

Posted in "as is where is", fraud in business sale Tagged with: ,

Business Seller’s Post Closing Payments in Jeopardy by Covid and Buyer Owner’s Prison Sentence

M&A Stories December 10, 2020 Introduction Sometimes a business owner gets an offer for his or her business that is higher than expected. The catch is that a significant part of the price is payable after the closing.  But the

Posted in risk of post closing payments Tagged with: ,

Buyer Can’t Sue Seller for Not Telling Buyer About Pending Loss of Major Customer

M&A Stories December 10, 2020 Introduction It is very important for a prospective buyer of a business to do smart due diligence to validate the purchase price. However, there is always a risk that the seller won’t tell you the

Posted in contracts, due diligence, extra-contractual fraud, fraud in business sale, non-reliance clause Tagged with: ,

Business Buyer’s Owner Loses Trademark to Competitor and Ends Up in Bankruptcy

M&A Stories December 08, 2020 Introduction You have to kick the tires of a business you want to buy. That includes asking whether the target’s tradename infringes upon a competitor’s tradename. The deal This deal involved the sale of the

Posted in copyrights, due diligence, patents, trademark infringement, trademarks Tagged with: ,

Seller’s Highly Leveraged Exit Strategy Collapses with Buyer’s Post-Closing Default

M&A Stories December 07, 2020 Introduction There is a lot more risk in selling your business when you turn over the keys to the buyer before getting all of your purchase price. The deal This deal involved the sale of

Posted in Guaranty, securing buyer's note, securing deferred purchase price, security agreement, seller carried purchase price Tagged with: ,

ADR Procedure Was Probably Arbitration and not an Expert Determination, Giving Delaware Chancery Court Jurisdiction

M&A Stories December 04, 2020 Introduction An acquisition often involves a post-closing purchase price adjustment reflecting the value of the net assets at closing. The parties often agree to submit any dispute over this calculation to an independent accounting firm.

Posted in arbitration vs expert determination Tagged with: ,

Generous Interpretation of Guaranty of Buyer Owner in Stock Acquisition Gives Seller a Break

M&A Stories December 03, 2020 Introduction The biggest risk that a seller of a business runs is not being paid all of the purchase price at closing. On way to manage this risk is to require the owners of the

Posted in guaranty of related acquisition agreements Tagged with: ,

APA’s Pennsylvania Choice of Law Provision Didn’t Apply to State’s Product Line Exception

M&A Stories December 02, 2020 Introduction A buyer of the assets of a manufacturing business is not responsible for claims arising from the use of products made by the seller, unless the buyer assumed the risk in the asset purchase

Posted in sale of product line, successor liability Tagged with: ,

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