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…
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Trust but Verify-Business Seller Failed to Verify Accuracy of Earnout Statement
Introduction A buyer and seller of a business often use an earnout when they can’t agree upon a purchase price. In that case, the purchase agreement provides for a buyer calculation of the earnout amount, along with an earnout dispute…
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: bootstrapping doctrine
Franchise Buyer’s Fraud Claim Bars Seller’s Summary Collection of Note
Introduction It can be easy for a creditor to obtain a judgment against a debtor that has defaulted on payment of a promissory note. Essentially all the creditor must do is produce the signed note and prove nonpayment. But not…
Fraud carve out saves buyer in “as-is where-is” in divestiture
Seller manufactures over-the-counter pharmaceutical products. On June 17, 2016, it sold one of its product lines to Buyer. The terms of that sale were memorialized in an asset purchase agreement. At the time of the sale, there was a class action suit…
Posted in "as is where is", fraud in business sale Tagged with: economic loss doctrine, fraud and breach of contract claims, fraud carve out
Seller of company can sue Buyer for making oral fraudulent and negligent misrepresentations
Seller’s Owner founded Seller in 2002. Seller was based out of the greater Sacramento, California area. In 2007, Seller began doing business as BenefitsCONNECT. BenefitsCONNECT is an online benefits enrollment and administration system that connects employer groups, insurance carriers, third…
Israeli pharma buyer’s fraud claim against seller of Mexican pharma company tossed out by court
In 2015, Buyer, an Israeli pharma company purchased Target, a Mexican pharmaceutical company, from Sellers, and the intellectual property used by Target from a Sellers affiliate. The total sale price came to $2.3 Billion. After the closing, Buyer claimed that…
No fraud in alleged buyer’s financial misrepresentations concerning buyer’s equity received by seller of company
Seller was two related companies, one, a provider of litigation support and e-discovery services and the other, a provider of temporary legal staffing to law firms and corporations. Seller along with Seller Affiliate, a related company providing various litigation support…
Buyer of business loses misrepresentation claim against seller because claim was not based upon seller’s breach of contract
Madison, Wisconsin based Target, is a contract manufacturer of custom vitamin and trace mineral premixes and value-added branded feed ingredients for the animal feed market. Seller was Target’s president and Buyer its vice-president. Both shared in Targets’ day-to-day operations, and…
Court said it may be reasonable for business buyer to rely on seller oral representation about competition
Target, based out of the Kansas City area, provides movie theater digital marketing/advertising and movie theater concessions. Sellers were the owners of Target. Buyer is a Texas capital investment limited liability company. In early 2015, Sellers circulated a solicitation seeking…
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