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 July 17, 2023 Introduction In this blog post, we discuss a…
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BUYER OF OCULAR ALLERGY TESTING SYSTEM BATTLES SELLER OVER EARNOUT
Preliminary legal skirmish highlights risks of using earnouts. M&A Stories May 22, 2023 Introduction: In the world of business acquisitions, it is common for buyers and sellers to struggle to agree on a purchase price. One approach to address this…
Posted in problems with earnouts Tagged with: asset purchase agreement, Business acquisitions, Buyer-seller conflicts, Commercially reasonable efforts, Disputes over earnout targets, Earnout agreements, M&A legal disputes, Marketing and sales budgets, Ocular allergy testing system, Risk management in M&A
BUYER NO LONGER REQUIRED TO PAY SELLER EARNOUT
Explore a recent M&A case where a buyer’s bankruptcy reorganization led to the elimination of an earnout obligation in the purchase of cloud-based secure messaging IP. Learn about the legal implications and key takeaways from this situation. M&A Stories March…
DELAWARE COURT RULES AGAINST 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 In a recent case, the Delaware Court of…
Posted in problems with earnouts Tagged with: Commercialization efforts, Commercially best efforts, Contingent payment structure, Delaware Court of Chancery, Discontinuation of development, Earn-out payments, Earnout claim, Good faith, Legal dispute, M&A legal, Medical device sellers, Milestone payments, Patient safety concerns, Product development challenges, Verdict
DISPUTE ARISES BETWEEN BUYER AND SELLER OVER NET SALES IN $1.7 MILLION EARNOUT CASE
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,…
SELLERS OF MEDICAL DEVICE COMPANY FAIL TO RECEIVE EARNOUT CLAIM DUE TO BUYER’S COMMERCIAL EFFORTS
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…
Posted in problems with earnouts Tagged with: Buyer obligations in M&A deals, Buyer's commitment in acquisition, Commercial efforts in M&A, Discretion in commercialization, Earnout disputes, Earnout payments in M&A, Integration clause in purchase agreements, M&A litigation, Medical device acquisition, Post-closing actions in M&A
NO OBLIGATION TO PROMOTE SELLER’S TOOLS IN EARNOUT DISPUTE, HOUSTON COURT RULES
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…
Posted in problems with earnouts Tagged with: Commercializing purchased assets, Drilling tool industry, Earnout disputes, Good faith and fair dealing, Implied obligations, M&A litigation, Negotiating earnout provisions, Purchase price considerations, Seller-buyer agreements, Texas law and commercial transactions
SELLER FAILS TO ENFORCE ACCOUNTING FIRM RESOLUTION IN EARNOUT DISPUTE
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…
Posted in arbitration vs expert determination, problems with earnouts Tagged with: arbitration clause, Bus Air LLC v. Woods Case, Business Deal Dispute, Clear Contract Language, Delaware Federal District Court, Earnout Calculation, expert determination, Independent Accounting Firm, M&A Dispute Resolution, Purchase Agreement Drafting
STRATEGIC BUYER REQUIRED TO PAY $40 MILLION EARNOUT FOR TRUCKING COMPANY DESPITE MISSED EBITDA 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: Earnout…
Posted in problems with earnouts Tagged with: Delaware Superior Court Ruling, Earnout Structure in Acquisitions, EBITDA Earnout Targets, Integration of Acquired Business, M&A Earnout Disputes, Post-Closing Operation Covenants, Purchase Agreement Ambiguity, Schneider National Carriers v. Kuntz Case, Strategic Buyer Obligations, Trucking Company Acquisition
SELLER’S EARNOUT/COMMISSION CLAIM UPHELD IN COURT AGAINST BUYER’S UNREASONABLE DELAY
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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