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Buyer of Assets of LLC Business Can Sue Seller LLC Member Personally for Seller Breach

February 28, 2020 Introduction Ordinarily the owner of corporation or LLC who sells the company’s assets is not personally liable to the buyer for his or her company’s asset purchase agreement obligations unless he or she signs the APA as

Posted in alter ego, breach of contract, breach of representations and warranties, representations and warranties Tagged with: , , , , , , ,

No Seller Indemnification Obligation to Buyer for Recall of Pre-Closing Product

December 19, 2019 Introduction The buyer of a manufacturing company runs the risk of having to repair or replace a product made by the seller before the closing. One risk is the cost of a recall of a product line

Posted in breach of representations and warranties, financial representation and warranty, indemnification, indemnification for pre-closing product loss, MAE rep, No Undisclosed Liabilities, representations and warranties

Monthly Financial Statements Not Covered by Financial Representation Covered by Books & Records Representation

Introduction In mergers and acquisitions agreements, the seller generally represents and warrants that the target’s financial statements for its most recent fiscal year and its most recent interim financial statements are accurate and complete, consistent with operations, and prepared in

Posted in books and records rep and warranty, financial representation and warranty Tagged with: , ,

Business Buyer Loses Claim for $8 Million of Nonrenewed Customer Contracts

Introduction A crucial part of a potential business buyer’s due diligence is evaluating the seller’s projections. However, those projections often do not materialize, and disappointing projections do not usually amount to a breach of the seller’s acquisition agreement representations and

Posted in customer and supplier rep, full disclosure rep, MAE rep, projections, representations and warranties Tagged with: ,

Buyer Stops Post Closing Payments Because of Seller’s Prior APA Breach

Introduction A buyer of a company often discovers after the closing that he or she overpaid for the business. And many times, it is because the target company did not match up to seller’s purchase agreement representations and warranties. In

Posted in asset purchase agreement, breach of representations and warranties, material rep and warranty breach, prior-material-breach doctrine, Withholding Post-closing payments Tagged with:

Buyer Didn’t Waive Seller Breach by Amending Asset Purchase Agreement

Introduction An acquisition of a company is sometimes done in one step: the buyer and seller sign a purchase agreement and immediately close the transaction on the same day.  This is called a simultaneous closing. Alternatively, the buyer and seller

Posted in asset purchase agreement, boilerplate provisions, breach of representations and warranties, breach of seller's covenants, deferred closing, representations and warranties, seller's covenants, waiver provision Tagged with: , , ,

Company Buyer Stops Note Payments to Seller, Claims Inaccurate Books

Introduction A buyer of a business never knows for sure what it is getting until after the closing. How does a buyer minimize the risk of overpaying for a business? Well, in addition to kicking the tires (due diligence), the

Posted in asset purchase agreement, financial representation and warranty, membership interest purchase agreement, offset or setoff provision, offset right, promissory note, representations and warranties Tagged with: , ,

Seller of target receiving privately held buyer stock failed to allege facts that established that buyer’s alleged fraud caused seller’s economic loss

Target is a Dallas based technology-consulting limited liability company and was owned by Sellers. Buyer is a technology services company then based in Jacksonville, Florida, and then owned by Buyer’s Owners. Buyer is privately held and not publicly traded. In

Posted in buyer's stock as currency, federal securities fraud, financial representation and warranty, purchase price, representations and warranties, stock purchase agreement, tying fraud to economic loss

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

Posted in Buyer beware, compliance with all applicable laws, due diligence, land use issues, representations and warranties, stock purchase agreement

Buyer can sue seller of urgent care centers for lost profits from Target’s alleged material breach of 3rd party payor contracts

Buyer is based in the greater Baltimore area and operates urgent care centers and clinics throughout central Maryland, Delaware, Pennsylvania, and Virginia. In January 2015, Buyer purchased Target from Seller, a physician. Target operated urgent care facilities in Pennsylvania. According

Posted in Buyer beware, due diligence, economic loss doctrine, material contracts, representations and warranties

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