Explore the intricate world of M&A legalities with our latest blog post, ‘Navigating M&A Pitfalls: Lessons from Schwartz v. Accuratus Corporation.’ Delve into the complexities surrounding assumed liabilities, and learn valuable lessons on meticulous documentation. Uncover the saga that unfolded in a recent M&A case and gain insights that are crucial for aspiring entrepreneurs, seasoned business owners, CFOs, and legal professionals. Discover why diligence in documentation is the key to successful M&A transactions. Join us on this journey through the Schwartz v. Accuratus Corporation case and fortify your understanding of post-closing disputes and the importance of comprehensive records.
M&A Stories
June 15, 2018
In a recent M&A case, the complexities surrounding assumed liabilities took center stage, underscoring the importance of meticulous documentation. Here’s a breakdown of the Schwartz v. Accuratus Corporation saga.
Accuratus Corporation, a precision machine-tooled ceramic components manufacturer, utilized beryllium oxide in its processes. The buyer, seeking to acquire Accuratus’ assets, meticulously assumed only those liabilities explicitly outlined in the schedule attached to the asset purchase agreement.
Post-closing, a plaintiff filed a lawsuit against the buyer, alleging exposure to beryllium had resulted in chronic beryllium disease. The crux of the matter lay in whether the buyer had indeed assumed liability for personal injuries, as asserted by the plaintiff.
The buyer contended that personal injury liabilities were not part of the attached schedule, and therefore, the court should dismiss the claim. However, a critical flaw emerged – the buyer could not produce the schedule detailing the assumed liabilities, complicating the legal battle.
The lesson here is crystal clear: always retain a comprehensive copy of the signed asset purchase agreement, including all exhibits, schedules, and related documents. In the unpredictable terrain of post-closing disputes, any attachment could become a linchpin. In this case, the missing schedule prolonged the legal proceedings, demanding additional time and resources from the buyer.
The plaintiff’s claim might have been swiftly addressed had the buyer been able to furnish the assumed liabilities schedule. This underscores the paramount importance of maintaining meticulous records.
For added security, consider listing crucial elements, such as assumed liabilities, directly in the body of the asset purchase agreement rather than relegating them to a separate schedule. Countless deals have unraveled due to missing schedules, turning what should be a routine dispute into a protracted legal battle.
In conclusion, the Schwartz v. Accuratus Corporation case serves as a stark reminder: diligence in documentation is the bedrock of successful M&A transactions. Aspiring entrepreneurs, seasoned business owners, CFOs, legal professionals, and all stakeholders involved should take heed and ensure their agreements withstand the scrutiny of unforeseen challenges.
Case Reference:
Schwartz v. Accuratus Corporation, Civil Action No. 12-6189, United States District Court, E.D. Pennsylvania (February 21, 2018).
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