Blog Archives

Buyer of Manufacturer’s Assets Has No Liability for Product Sold Before Closing

M&A Stories October 28, 2020 Introduction Management of product liability risk when buying a company is always an issue, even in an asset acquisition. Especially, if there is a history of seller products liability claims. The deal This deal involved

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

Expert Can Testify That GM Was Unreasonable in Disapproving Dealership Sale

M&A Stories October 20, 2020 Introduction Selling your franchise business usually requires the consent of the franchisor, whether you own a Subway franchise or an auto dealership. However, state law generally requires the franchisor to be reasonable in this approval

Posted in approval of franchisor, denial of consent must be reasonable, franchise sale Tagged with: ,

Business Buyer Fails To Make Timely Purchase Payment and Loses Deal

M&A Stories October 16, 2020 Introduction Business people often agree upon the terms of an acquisition in an atmosphere of goodwill. The details of the documentation are left to their inside and outside professional advisers. This friendly relationship is helpful

Posted in failure to make timely purchase price payment, rescission Tagged with: ,

Business Buyer’s Set-off Provision Did Not Apply to Unliquidated Indemnity Claims

M&A Stories October 14, 2020 Introduction The buyer of a business is always concerned about the risk that the target business is not as advertised. One risk management tool is to defer payment of some of the payments to the

Posted in offset or setoff provision, unliquidated or disputed claim Tagged with: ,

EBITDA Purchase Price Adjustment Provision Center Stage of $4.4 Million Fight

M&A Stories October 9, 2020 Introduction Many acquisitions are priced based upon EBITDA. Often the purchase price is adjusted after the closing based upon some agreed upon formula such as EBITDA. The deal This deal was a sale of the

Posted in determination of purchase price adjustment, EBITDA, purchase price adjustment Tagged with: , ,

Buyer Risk for Unpaid PPP Loan in M&A Transaction

M&A Development October 6, 2020 Introduction Unpaid PPP loans add a new risk for the buyer and seller of a business. The Small Business Administration published guidance on this M&A risk on October 2, 2020. Following the SBA guidance is

Posted in deferred closing, governmental approval, PPP loan, SBA approval re PPP loan Tagged with: ,

APA Arbitration Clause Doesn’t Apply to Buyer/Seller Affiliate Contract

M&A Stories September 29, 2020 Introduction Buyers and sellers of businesses often select arbitration as their dispute resolution procedure. Arbitration is seen as faster and less costly than going through the courts. However, a binding arbitration clause in an acquisition

Posted in arbitration, dispute resolution provision Tagged with: ,

Case Demonstrates Risk of Trying to Operate Business Before Acquisition Closing

M&A Stories September 25, 2020 Introduction It is not unusual to sign a definitive acquisition agreement and defer the closing until some important third-party approvals are obtained. There is a temptation sometimes to structure the deal so that the buyer

Posted in certificate of need, deferred closing, governmental approval, liquidated damages provision Tagged with: ,

Tax Structure for Selling S Corp Stock While Keeping Company Real Estate

M&A Tax Structures for Closely Held Businesses September 8, 2020 Introduction The buyer of a closely held business has strong reasons to purchase the target’s assets instead of stock. That way the buyer can pick and choose what assets to

Posted in F reorganization, S corporation, stock sale, unwanted assets Tagged with:

PLR Probably Closing Condition for Target S Corporation’s 2-Class Stock Issue

M&A Tax Stories September 2, 2020 Introduction A buyer of an S corporation wants to make sure that the target is in fact an S corporation. Finding out after closing risks potentially significant federal and state corporate income taxes. The

Posted in One class of stock, S corporation Tagged with:

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