December 11, 2019 Introduction The buyer of a privately held business often has a deadline to make an indemnification claim for the breach of a seller representation and warranty. This survival period in an acquisition agreement often expires sometime from…
Blog Archives
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: M&A stories, M&A tips, monthly financial statements
Court Rules That EY Earnout Calculation Was Arbitration Not Expert Determination
Introduction There are often post-closing calculations that must be made in an M&A deal. Examples are working capital and earnout calculations. Often the parties agree in advance to a dispute resolution procedure in the M&A documents in the event there…
ESOP Bank Trustee & Owner Must Pay $6.5 Million Purchase Price Overpayment to ESOP
Introduction One exit strategy for a business owner is to sell your company to an ESOP; especially if there are no serious buyers. However, those transactions are highly regulated by the federal government and must be done right. The deal…
Posted in capitalization of cash flow, discounted cash flow or DCF, independent trustee, projections, prudence, sale of business to ESOP, valuation Tagged with: M&A stories, M&A tips, overpayment
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: M&A stories, M&A tips
Buyer Loses Dispute with Asset Seller Over Responsibility for Deal’s Sales Tax
Introduction The language used in an M&A deal matters. In a post-closing dispute, the lawyers and judges look to the language of the M&A document to resolve the dispute. And sometimes, the language will work against what a party thought.…
Posted in allocation of sales tax from transaction, asset purchase agreement Tagged with: M&A stories, M&A tips, sales tax imposed on buyer
Court Greenlights Business Seller’s Fraud Lawsuit Over Earnout Dispute
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…
Court Holds That $12 Million Merger Termination Fee Payment Not Exclusive Remedy
Introduction It is common in M&A deals for the seller to have the right to terminate an agreement by paying a significant termination fee; especially as part of a fiduciary out structure. The deal This case involves players in the…
Insolvent Nonprofit Hospital’s 363(f) Sale Was Free of a $305 Million Cost Imposed by CA AG
Introduction The sale of the assets of a nonprofit hospital in California requires the permission of the state’s attorney general. The deal This deal involves the Bankruptcy Code Section 363(f) sale of four California nonprofit hospitals in bankruptcy for $610…
Buyer to Indemnify Business Seller for 3rd Party Asbestos Claim Punitive Damages
Introduction Liability for asbestos claims is a common risk with manufacturing companies. Sophisticated buyers and sellers of manufacturing businesses are aware of the risk and usually manage it through an allocation between the buyer and the seller in the acquisition…
Posted in asbestos claims, indemnification, punitive damages Tagged with: indemnification for punitive damages, M&A stories, M&A tips
Recent Posts
- Ambiguous APA Forum Selection Clause Did Not Waive Right to Remove to Federal Court
- No Seller Indemnification Obligation to Buyer for Recall of Pre-Closing Product
- Buyer’s Indemnification Claim Notice Tolled 1 Year Contractual but Not 3 Year Statutory Limitations Period
- Monthly Financial Statements Not Covered by Financial Representation Covered by Books & Records Representation
- Court Rules That EY Earnout Calculation Was Arbitration Not Expert Determination
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