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Expert Can Testify That GM Was Unreasonable in Disapproving Dealership Sale

M&A Stories October 20, 2020 Introduction Selling your franchise business usually requires the consent of the franchisor, whether you own a Subway franchise or an auto dealership. However, state law generally requires the franchisor to be reasonable in this approval

Posted in approval of franchisor, denial of consent must be reasonable, franchise sale Tagged with: ,

Business Buyer Fails To Make Timely Purchase Payment and Loses Deal

M&A Stories October 16, 2020 Introduction Business people often agree upon the terms of an acquisition in an atmosphere of goodwill. The details of the documentation are left to their inside and outside professional advisers. This friendly relationship is helpful

Posted in failure to make timely purchase price payment, rescission Tagged with: ,

Business Buyer’s Set-off Provision Did Not Apply to Unliquidated Indemnity Claims

M&A Stories October 14, 2020 Introduction The buyer of a business is always concerned about the risk that the target business is not as advertised. One risk management tool is to defer payment of some of the payments to the

Posted in offset or setoff provision, unliquidated or disputed claim Tagged with: ,

EBITDA Purchase Price Adjustment Provision Center Stage of $4.4 Million Fight

M&A Stories October 9, 2020 Introduction Many acquisitions are priced based upon EBITDA. Often the purchase price is adjusted after the closing based upon some agreed upon formula such as EBITDA. The deal This deal was a sale of the

Posted in determination of purchase price adjustment, EBITDA, purchase price adjustment Tagged with: , ,

Buyer Risk for Unpaid PPP Loan in M&A Transaction

M&A Development October 6, 2020 Introduction Unpaid PPP loans add a new risk for the buyer and seller of a business. The Small Business Administration published guidance on this M&A risk on October 2, 2020. Following the SBA guidance is

Posted in deferred closing, governmental approval, PPP loan, SBA approval re PPP loan Tagged with: ,

APA Arbitration Clause Doesn’t Apply to Buyer/Seller Affiliate Contract

M&A Stories September 29, 2020 Introduction Buyers and sellers of businesses often select arbitration as their dispute resolution procedure. Arbitration is seen as faster and less costly than going through the courts. However, a binding arbitration clause in an acquisition

Posted in arbitration, dispute resolution provision Tagged with: ,

Case Demonstrates Risk of Trying to Operate Business Before Acquisition Closing

M&A Stories September 25, 2020 Introduction It is not unusual to sign a definitive acquisition agreement and defer the closing until some important third-party approvals are obtained. There is a temptation sometimes to structure the deal so that the buyer

Posted in certificate of need, deferred closing, governmental approval, liquidated damages provision Tagged with: ,

Seller Retention of Receivables in Asset Sale Blows C Reorganization

M&A Tax Stories August 26, 2020 Introduction Taxes can be a major transaction cost when selling a business, especially federal income taxes. One exit plan structure for an owner of a company operating as a corporation is a C Reorganization.

Posted in C Reorganization, substantially all assets, tax deferred reorganization Tagged with: , , ,

Business Seller Fights Through a Jury Trial and an Appeal to Enforce Oral Side Deal

August 12, 2020 Introduction Sometimes the parties to an M&A transaction want to leave certain agreed terms out the written agreements to avoid adverse tax consequences. These additional terms are made in the form of a handshake: an oral side

Posted in 351 M&A transactions, boot, handshake redemption obligation, integration clause, nonqualified preferred stock, parol evidence rule Tagged with: ,

Stock Seller Sues Buyers for Failure to Close S Corp Books to Obtain Q1 Taxable Loss

July 27, 2020 Introduction One tax issue when selling the stock of your S corporation business midyear is dividing up the year’s income and expenses. That is because an S corporation passes its income, and expenses through to the owners

Posted in further assurance provision, S corporation, Section 1377 election Tagged with: ,

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