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BUYER HAD NO FURTHER OBLIGATION TO PAY SELLER AN EARNOUT

The buyer had purchased seller’s cloud-based secure messaging IP in part, for a royalty-based earnout. The buyer emerged from a bankruptcy reorganization free of the earnout obligation. M&A Stories March 20, 2023 Introduction A seller of a business worries about

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DELAWARE COURT REJECTS MEDICAL DEVICE SELLERS’ EARNOUT CLAIM

The Delaware Court of Chancery holds that the buyer of the medical device used “good faith” and “commercially best efforts” to commercialize the sellers’ medical device. M&A Stories September 29, 2022 Introduction Deals involving the acquisition of an unproven medical

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BUYER OF PRODUCT LINE FIGHTS WITH SELLER OVER MEANING OF NET SALES IN A $1.7 MILLION EARNOUT DISPUTE

Buyer claims that earnout is based upon the post-closing net sales of seller’s small box chassis products. The seller claims that earnout includes net sales of small box chassis products acquired by buyer from other sellers. M&A Stories September 20,

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SELLERS OF MEDICAL DEVICE COMPANY FAIL TO MAKE EARNOUT CLAIM THAT BUYER DID NOT USE “COMMERCIALLY REASONABLE EFFORTS” IN COMMERCIALIZING SELLERS’ MEDICAL DEVICE

An Indiana federal court concludes that sellers’ allegations of twenty-one buyer post-closing actions and inactions did not diverge “from the level of efforts, expertise, and resources applied by” the buyer “in the ordinary and usual course of its business.” M&A

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IN EARNOUT DISPUTE, BUYER OF OIL AND GAS DRILLING TOOL MAKER HAD NO OBLIGATION TO USE BEST EFFORTS TO COMMERCIALIZE SELLER’S TOOLS

Houston federal court holds that under Texas law, the buyer had no implied obligation of good faith and fair dealing to seller’s owner to use best efforts to commercialize drilling tool line the buyer purchased from the seller. M&A Stories

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SELLER OF BUSINESS FAILS TO FORCE EARNOUT DISPUTE TO BE RESOLVED BY AN ACCOUNTING FIRM

The Delaware federal district court held that the purchase agreement’s requirement to submit earnout dispute to an independent accounting firm did not foreclose resolution of the matter by the court because the agreement’s language was only for expert determination and

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STRATEGIC BUYER OF TRUCKING COMPANY MUST PAY $40 MILLION EARNOUT TO SELLER EVEN THOUGH ACQUIRED BUSINESS DID NOT HIT EBITDA EARNOUT TARGETS

The Delaware Superior Court held that the buyer in purchase agreement’s post-closing operation covenants had breached a covenant to grow target’s fleet of tractor trucks by 60 tractors per year for three years. M&A Stories May 13, 2022 Introduction Post-closing

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Seller of Assets of Business that Designed and Created Water and Sewer Valve Systems Can Pursue Earnout/Commission Claim Against Buyer

Delaware trial court holds that the seller’s claim that the buyer unreasonably delayed additional product testing requested by a customer to the point where the prospective business deal fell apart, may establish a buyer breach of its implied duty to

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