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Court Greenlights Business Seller’s Fraud Lawsuit Over Earnout Dispute

Introduction Disappointing earnout deals are common. The deal This deal involved the stock acquisition of the target, a legal analytics company by a competitor. The price was $9 million cash plus a $3 million earnout potential.  The earnout was based

Posted in anti-reliance clause, earn outs, integration clause Tagged with: ,

Court Holds That $12 Million Merger Termination Fee Payment Not Exclusive Remedy

Introduction It is common in M&A deals for the seller to have the right to terminate an agreement by paying a significant termination fee; especially as part of a fiduciary out structure. The deal This case involves players in the

Posted in exclusive remedy, fraud carveout, termination of M&A agreement, termination or breakup fee, willful breach carveout Tagged with: , , , ,

Forum Selection Clause Enforced in Buyer Note Given in Acquisition of Company

Introduction A buyer of a company wants the purchase agreement to specify that a post-closing dispute will be litigated in a state or country convenient to it. Often both sides can agree that the most convenient forum is where the

Posted in forum selection clause Tagged with: ,

Fraud Carve-Out in APA’s Exclusive Remedy Provision Saves Buyer’s Employee Non-Solicitation Claim

Introduction Most acquisition agreements provide that the agreement’s indemnification provisions are the exclusive remedy for a contractual breach. However, it is also common to exclude fraud claims from this excusive remedy provision. The deal This deal involved the acquisition of

Posted in boilerplate provisions, fraud carveout, hiring seller's employees, nonsolicitation of employees and customers Tagged with: ,

9th Circuit Holds APA’s Delaware Forum Selection Clause Contravened Strong Idaho Public Policy

Introduction Many buyers and sellers in M&A transactions like Delaware courts to handle their disputes because of the reputation for competence. Thus, it is common to see a Delaware forum selection clause in M&A agreements. Some parties to a deal

Posted in contravene strong state public policy, forum non conveniens doctrine, forum selection clause Tagged with: , ,

Bootstrapping Doctrine No Bar to Business Buyer’s Fraud Claim

Introduction A buyer of a closely held business often has limited recourse against a seller if the deal turns out bad.  Even if fraud is involved, the buyer must run the gauntlet of indemnification cap, survival period, exclusive remedy, non-reliance,

Posted in bootstrapping doctrine, exclusive remedy, fraud carveout, fraud in business sale, non-reliance clause Tagged with:

Franchisee’s Fight with Franchisor Costs It a Sale of its Franchise

Introduction This is a story of a broken deal: a sale of a restaurant franchise that did not happen because of a dispute with the franchisor. The deal The case here involved a franchise for seven Tim Hortons restaurants located

Posted in approval of franchisor, asset purchase agreement, franchise sale, integration clause, no oral modifications of contract Tagged with: ,

Business Seller Can’t Break Delaware Forum Selection Clause

Introduction This case demonstrates how hard it is for a party to an M&A agreement to get out of the forum selection clause. The deal The buyer was a Georgia based Delaware company providing nationwide accounts receivable and revenue cycle

Posted in forum selection clause 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: , ,

Court Restricts Company Seller’s Nationwide Noncompete to 3 States

Introduction The sale of a company usually comes with its goodwill. In fact, in many cases goodwill is the crown jewel of the business. The last thing a buyer wants, is to pay top dollar for the business only to

Posted in boilerplate provisions, California, choice of law provision, Delaware, noncompete area, reformation Tagged with: , ,

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