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…
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Buyer May Pay $1.2 Million Twice for Seller Assets Subject to Financing Statement
Introduction One of the legal risks when purchasing a business is purchasing assets that are collateral for a loan. The deal This is a follow up to a deal where the buyer purchased the assets of a seller that made…
Owner Sells Company’s Fitness Club Assets; Fights Personal Trainer Claims
Introduction Selling your company can be very stressful for employees and contractors not picked up by the buyer. Especially those that have depended upon cash flow from you company for a long time. This creates a risk you may be…
Posted in asset purchase agreement, assignment of contracts, contracts, due diligence Tagged with: assignment of contracts; due diligence of contracts
Buyer of Chemical Division Sues Seller for Understating Costs
Introduction There are unique risks for a buyer when purchasing a division of a seller (called a divestiture). It is easier to assess the quality of earnings of a stand alone business than with a division where costs must be…
Posted in divestitures, due diligence, quality of earnings assessment Tagged with: allocation of companywide costs, divestitures, quality of earnings
Business Buyer Risks Loss of Assets to Secured Creditor
Introduction Many companies put their assets up as collateral for financing. A buyer of a company needs to know this before buying the business. This risk is minimized in part by the seller representing and warranting in the purchase agreement…
No Sexual Harassment Successor Liability for Law Firm Asset Buyer
Introduction A buyer often prefers to purchase the assets of a company instead of its equity (such as stock of a corporation). One advantage of an asset purchase is that the buyer can avoid responsibility for the selling company’s liabilities;…
Seller of company not responsible for buyer’s post-closing failure to obtain electroplating permit
Seller was the owner of Target, a business located in Palo Alto, California that specializes in the electroplating of metal components for industrial use. On June 19, 2014, Seller executed a letter of intent to sell all of Seller’s shares…
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