Blog Archives

M&A Earnouts on Acquired Contracts: Guarding Against Hidden Termination Risks

Protect M&A earnouts linked to acquired contracts. Understand how termination rights create hidden risks for seller payments and find pre-closing strategies for lower middle market deals. M&A Stories May 29, 2025 In lower middle market mergers and acquisitions, earnouts are

Posted in earnout based upon revenue from at will contracts, problems with earnouts Tagged with: , , , , , , , , , , , , , , ,

Operational Clarity: Protecting Earnouts Beyond Financial Targets in Lower Middle Market M&A

Beyond Financial Targets: How Operational Clarity Protects Earnouts in Lower Middle Market M&A. Learn from a recent case highlighting the crucial need to address post-closing operational control in deal agreements to minimize litigation risks for buyers, sellers, and advisors. M&A

Posted in problems with earnouts Tagged with: , , , , , , , ,

Why Delaware’s Implied Covenant of Good Faith and Fair Dealing Is Not Enough Protection for an Earnout

In this blog post, we explore the crucial role of earnout agreements in M&A transactions and why Delaware’s implied covenant of good faith and fair dealing is not sufficient protection for sellers. A recent Delaware Court of Chancery case underscores

Posted in Express efforts clause vs. Delaware's implied covenant of good faith and fair dealing, problems with earnouts Tagged with: , , , , , , , , , , , , , , , , , , ,

Earnouts and the Importance of Key Employee Retention

M&A earnouts pose significant risks for sellers, especially when buyers control post-closing business performance. This blog examines a case where a seller lost a $5 million earnout after a private equity buyer moved key employees to a separate management company.

Posted in Key Employee Retention Requirement, problems with earnouts Tagged with: , , , , , , , , , , , , , , , , , , ,

When Private Equity’s Global Strategy Undermines Earnouts

This blog delves into the legal complexities of earnouts in private equity acquisitions, using a recent Delaware Superior Court case as a key example. It explores the risks sellers face when private equity firms orchestrate strategic decisions that negatively affect

Posted in private equity, problems with earnouts Tagged with: , , , , , , , , , , , , , , , , , , , , , , ,

The Risks of Earnouts with Buyers Who Compete

Earnouts are risky, especially when your buyer has a pre-existing competitive business.  M&A Stories December 6, 2024 In 2019, a seller of athletic event registration software agreed to sell its assets to a buyer in the same industry. The transaction

Posted in problems with earnouts Tagged with: , , , , , , , , , , , , ,

Buyer-Friendly Earnout Provision Shields Buyer from Seller’s Claim

This blog dives into a key M&A case from the Delaware Court of Chancery that underscores the importance of earnout clauses in asset acquisition deals. It centers on a $1.7 million acquisition in the data management sector, where the buyer

Posted in problems with earnouts Tagged with: , , , , , , , , , , , , , , ,

Earnouts: The Importance of Clear Buyer Obligations

This blog explores the complexities of earnout structures in M&A deals, emphasizing the need for sellers to negotiate clear post-closing obligations. Using a real-life Delaware court case, the post highlights how vague earnout terms can lead to disputes and legal

Posted in problems with earnouts Tagged with: , , , , , , , , , , ,

Delaware Court Awards Over $1 Billion in Earnout Dispute Over Surgical Robot Milestones

This blog covers a Delaware Court of Chancery case involving a $1 billion earnout dispute over FDA milestones in the acquisition of a surgical robotics startup. The post highlights key legal issues such as earnout provisions, commercially reasonable efforts obligations,

Posted in problems with earnouts Tagged with: , , , , , , , , , , , , ,

M&A Buyer’s Earnout Risk

Explore the complexities of M&A transactions with a deep dive into the legal battles surrounding earnouts. This post dissects a real-world case involving a $226 million acquisition in the insurance industry, where the buyer alleges overpayment due to fraudulent earnout

Posted in problems with earnouts Tagged with: , , , , , , , , , , , , , , , , , , , ,

Recent Comments

Categories