The lease said the seller was not responsible for the lease if assigned to an assignee (the buyer in this case) who had a net worth of $20 million or more at the time of assignment. M&A Stories May 31,…
Monthly Archives: May 2023
SELLER OF RESTAURANT CHAIN ASSETS NOT LIABLE FOR PRE-CLOSING LEASE
Posted in problems with leases Tagged with: Court ruling on lease obligations, GAAP compliance in lease agreements, Landlord-tenant disputes in M&A deals, Lease assignment dispute, Legal costs and fees in lease disputes, M&A legal case, Net worth requirements in lease assignments, Restaurant chain asset acquisition, Seller liability in M&A transactions, Seller's responsibility for pre-closing leases
BUYER OF OCULAR ALLERGY TESTING SYSTEM BATTLES SELLER OVER EARNOUT
Preliminary legal skirmish highlights risks of using earnouts. M&A Stories May 22, 2023 Introduction: In the world of business acquisitions, it is common for buyers and sellers to struggle to agree on a purchase price. One approach to address this…
Posted in problems with earnouts Tagged with: asset purchase agreement, Business acquisitions, Buyer-seller conflicts, Commercially reasonable efforts, Disputes over earnout targets, Earnout agreements, M&A legal disputes, Marketing and sales budgets, Ocular allergy testing system, Risk management in M&A
BUSINESS BUYER FACES DEFAMATION LAWSUIT FROM SELLER’S OWNER
The buyer of a company is sued for defamation by the seller’s owner for telling former seller employees that the seller’s owner had mishandled their health insurance premium contributions. M&A Stories May 22, 2023 Introduction: In a unique legal case,…
A BADLY DRAFTED EMPLOYMENT AGREEMENT WITH SELLER’S OWNER ENDS UP IN COSTLY LITIGATION BETWEEN THE BUYER OF SELLER’S BUSINESS AND SELLER’S OWNER
The buyer hires the seller’s owner to be its vice president of sales, under a 5-year employment agreement, with the buyer’s right to terminate for cause. The agreement also gave the buyer the right to fire the seller’s owner at…
Posted in Problem with seller owner's competition, problems with seller's employees Tagged with: Appellate court decision, Buyer-seller disputes, Employment agreement, Employment contract, Employment termination, Litigation costs, M&A litigation, Non-competition covenant, Seller's owner, Termination for cause
BUYER OF MEDICAL PRACTICE NOT RESPONSIBLE FOR BREACH OF UNASSUMED CONTRACT
The seller’s practice entered into a contract with a doctor employee who left after the closing. The seller promised in the contract to give the doctor any medical records of any patient that followed the doctor. The doctor sued the…
OWNER SELLS RESTAURANT AND ITS BUILDING. IS SUED BY A BUILDING TENANT WHO HAD A RIGHT OF FIRST REFUSAL TO PURCHASE THE BUILDING
The restaurant owner unsuccessfully argued that the tenant’s right of refusal was not triggered because the owner was selling both the restaurant and the building. M&A Stories May 7, 2023 Introduction A buyer of a business frequently seeks the real…
BUYER OF SMALL HEATING AND AIR CONDITIONING BUSINESS PAINFULLY LEARNS VALUE OF DUE DILIGENCE AFTER CLOSING
The buyer concludes it overpaid for the business and stops making deferred purchase price payments. Both the trial and the appellate court conclude that the buyer breached the acquisition agreements. They order the buyer and its owner (as guarantor) to…
Posted in Problems with due diligence Tagged with: Buyer's Liability in M&A Deals, Buyer's Mistake in Due Diligence, Buyer's Obligations in Asset Purchase Agreements, Importance of Comprehensive Business Evaluation, Legal Consequences of Breaching Acquisition Agreements, Lessons from M&A Failures, M&A Due Diligence, Overpayment in Business Acquisition, Understanding Business Value in M&A. Impact of Incomplete Due Diligence
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