M&A Stories April 29, 2024 M&A buyers often ask for the right to offset losses it incurs post closing for seller acquisition agreement breaches against deferred acquisition payments. The seller sometimes agrees to this arrangement but wants the seller breach…
Monthly Archives: April 2024
If A M&A Seller Must Agree to an Offset, Carefully Define the Seller Breach That Triggers It
Posted in problems with seller nondisclosure Tagged with: Asset acquisition, asset purchase agreement, Breach of Representations, Budget Overruns, Business acquisition, business contracts, Buyer Risks, Case Study, contractual disputes, Disclosure Requirements, due diligence, Legal precedent, Litigation strategy, M&A legal, New York law, purchase price adjustment, seller liabilities, seller nondisclosure, Software License Fees, User Fees, Warranties
Good Faith Buyer Earnout Covenants Provide Little Protection for the Seller
M&A Stories April 24, 2024 In lower middle market M&A, earnouts often spark contentious post-closing debates. And this deal is no exception. The target in this transaction engaged in the sale of home goods such as fixtures and hardware for…
Posted in problems with earnouts Tagged with: Business acquisitions, business continuity, business law, business strategies, Butler v. Ferguson Enterprises Inc., Buyer-Seller Agreements, CFO insights, Cincinnati, contract law, contract negotiations, Earnout disputes, earnouts, Entrepreneurship, judicial scrutiny, legal cases, Legal Challenges, Legal Disputes, legal implications, legal insights, legal recourse, Litigation, M&A, Mergers and Acquisitions, operational matters, operational performance, Post-closing disputes, profitability, stakeholder management
Understanding M&A Asset Buyer Responsibilities for Unassumed Seller Contracts
Explore the intricacies of M&A asset acquisitions and buyer responsibilities through real-world legal cases. Delve into the complexities of unassumed seller contracts, as illustrated by Tower Automotive Operations USA I, LLC v. Vari-Form Manufacturing Inc. Learn how meticulous legal diligence…
Posted in ratifying unassumed contract by post-closing action Tagged with: Asset acquisition, asset buyer responsibilities, automotive components, automotive industry, Board members, Business acquisitions, business expansion, CEOs, CFOs, consolidation, contractual implications, contractual nuances, Contractual obligations, Detroit federal district court, exit opportunities, growth strategies, Jeep Wrangler platform, legal diligence, legal obligations, legal recourse, Legal Saga, M&A, Mergers and Acquisitions, strategic advantage, strategic foresight, Tower Automotive case, unassumed seller contracts
Navigating Real Estate Lease Assignments in M&A: A Case Study
In this insightful blog post, we delve into the complexities of real estate lease assignments within the context of mergers and acquisitions (M&A). Using a compelling case study involving a marijuana cultivation facility in Phoenix, we explore the intricacies of…
Posted in Problems with Real Estate Leases Tagged with: case study analysis, Contractual Stipulations, Court of Appeals of Arizona, Due diligence in M&A, Growth Opportunities Inc. v. Tenbar Inc., landlord consent, Lease Agreement Compliance, Lease Assignment Case Study, Lease Assignment Challenges, Lease Assignment Complexities, legal battle, Legal Obligations in M&A, Legal precedent, legal ramifications, M&A legal issues, M&A Transactions, Marijuana Cultivation Facility, Mergers and Acquisitions, Phoenix, Real Estate in M&A, Real Estate Law, Real Estate Lease Assignments, Regulatory Compliance
Navigating Earnout Disputes in Mergers & Acquisitions
M&A Stories April 7, 2024 In the intricate landscape of mergers and acquisitions, earnouts serve as a crucial mechanism for aligning buyer and seller interests on purchase price. However, beneath their apparent simplicity lies a potential minefield of disputes, as…
Posted in Uncategorized Tagged with: and prudent navigation, business valuation gaps, business-to-business acquisitions, buyer-seller alignment, buyer-seller relationship, case study analysis, contractual drafting, contractual safeguards, Delaware Federal District Court, earnout acceleration events, Earnout disputes, earnout structures, employee count thresholds, financial goals, legal complexities, legal pitfalls, Legal Precedents, litigation risks, Mergers and Acquisitions, post-transaction integration, strategic stock acquisition
Risks of Limited Buyer M&A Due Diligence of a Competitor
M&A Stories April 2, 2024 In the realm of mergers and acquisitions, the pursuit of a competitor as an acquisition target introduces a unique set of due diligence challenges, distinct from those encountered in transactions with noncompetitor entities. Consider the…
Posted in Uncategorized Tagged with: Arkansas-based business, asset purchase agreement, business growth, competitor acquisitions, Compliance, Connecticut trial, contractual assurances, Court rulings, EI Du Pont De Nemours And Company v. Chemtura Corporation, exit plans, fluorochemical market, industrial applications, Legal precedent, Legal Risks, M&A Due Diligence, post-business hours tour, representations and warranties, strategic expansion
Recent Posts
- Delaware Chancery Court Uses Implied Covenant to Force Buyer to Supply Information to Seller Necessary to Identify Pipeline Projects That Qualify for an Earnout
- Why Every M&A Earnout Deal Needs a Buyer Efforts Clause — Even with Strong Buyer Covenants
- M&A Seller Deadlines Nobody’s Watching: Earnout Calculations, Indemnification, and Escrow Claims
- Delaware’s Implied Covenant of Good Faith and Fair Dealing Can’t Save $400 Million Regulatory Earnout Milestone When Government Changed Approval Pathway
- What Your Anti-Reliance Clause Cannot Do
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- asset purchase
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- Assignment
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- bitcoin
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- boot
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- broad or narrow scope of forum selection clause
- bundled sales
- business cards
- business judgment rule
- buyer assumption of seller liability
- Buyer beware
- buyer connected to seller insiders
- buyer covenant to provide seller access to promote seller products post-closing
- buyer earnout working capital funding covenant
- buyer equity
- buyer has no regulatory problems
- Buyer payment of seller retained liabilities
- buyer representations and warranties
- buyer's assumption of seller liabilities in asset acquisition
- buyer's covenants
- buyer's stock as currency
- buying distribution business
- C Reorganization
- Calculating Earnout Metrics
- California
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- capitalization of cash flow
- cash
- cash and cash equivalents
- CERCLA or superfund liability
- certificate of insurance
- certificate of need
- CGL Policy
- Change of Control
- choice of law provision
- choice of law provision
- claim against seller's liability insurance
- closing
- co-author
- commercially reasonable efforts
- common interest doctrine
- compliance with all applicable laws
- compliance with law
- consent to assignment
- consent to assignment
- Consistent with past practice of acquired business
- constructive knowledge
- constructive knowledge
- continuity of enterprise exception
- continuity of ownership
- contracts
- contravene strong state public policy
- controlling shareholder fiduciary duty M&A
- copyrights
- corporate overhead
- corporate overhead allocations
- covenant not to compete
- Covenants
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- customer and supplier rep
- customer deposits
- customer due diligence
- customer list
- customer list
- cybersecurity risks
- damages
- de facto merger exception
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- deduction of expenses buyer traded away
- deferred closing
- defining earnout milestone by business goal
- defining retained business by category not as currently conducted
- Delaware
- deliberate fraud carveout
- denial of consent must be reasonable
- dental practice sale
- Description of business assets purchased
- determination of purchase price adjustment
- digital assets
- diminuation of value
- direct
- director and officer duty of care
- director liability
- directors and officers insurance policy
- discharge in bankruptcy
- disclosure schedule
- discounted cash flow or DCF
- dispute resolution procedure
- dispute resolution provision
- distressed business acquisitions
- divestitures
- doing deal with company's officer or director
- due diligence
- duty to defend
- Duty to Defend
- Duty to negotiate in good faith
- duty to warn
- earn out
- earn out dispute procedure
- earn outs
- Earned customer deposits
- earnout
- earnout as ownership interest in buyer
- earnout based upon revenue from at will contracts
- earnout dispute resolution procedure
- earnout payable upon constructive termination
- earnout payable upon termination without cause
- earnouts based on construction milestones
- earnouts based upon fda/ec milestones
- earnouts in bankruptcy
- EBITDA
- EBITDA
- EBITDA earnouts
- economic loss doctrine
- employment agreement
- employment agreement
- enforce against nonparty
- enforceability of non-owner noncompete
- enforcing buyer earnout deadlines
- entire fairness
- environment representations and warranties
- environmental
- environmental problems
- equitable contribution
- equitable estoppel
- escrow
- exclude transaction costs and success bonuses from profit calculation
- Excluded Assets
- excluded liabilities
- excluded or retained liabilites
- exclusive remedy
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- excuse for untimely indemnification claim
- executory contracts
- expenses that should be capitalized
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- Express efforts clause vs. Delaware's implied covenant of good faith and fair dealing
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- extension of closing
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- fee based upon buyer debt assumption
- financial representation and warranty
- financing acquisition issues
- for cause termination
- force majeure
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- form over substance
- forum non conveniens doctrine
- forum selection clause
- franchise sale
- fraud
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- fraud in business sale
- fraud in the inducement exception
- fraudulent concealment
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- further assurance provision
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- getting buyer to provide earnout calculation supporting data
- governmental approval
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- Guaranty
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- handshake redemption obligation
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- hiring seller's employees
- hybrid noncompetes
- implied assumption of seller contract/liability
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- implied covenant of good faith and fair dealing
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- indemnification
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- independent trustee
- inequitable
- insider
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- integration clause
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- Intellectual Property
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- merger
- merger agreement
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- misappropriation of likeness
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- mutual mistake
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- negligent misrepresentation
- Negotiated Pre-closing price concessions and releases
- net working capital adjustment
- New York
- no kickback or bribe rep
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- Non-Disparagement Clause
- non-reliance clause
- nonbinding
- nonbusiness income
- nonbusiness income/sale of subsidiary
- noncompete area
- noncompete term extensions
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- nondischargeable debt in bankruptcy
- nondisclosure agreement
- nondisclosure agreements
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- nonqualified preferred stock
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- note payment amount adjustment
- notice
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- objection -reasonable detail
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- One class of stock
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- oral contract
- oral contracts
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- ordinary course of business
- overly complicated language in contract
- owner liability for company breach of financing deal
- Ownership of Target Law Firm File
- parol evidence rule
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- patents
- payroll tax
- permits and certificates
- personal goodwill
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- personal guaranty of lease
- Personal Name
- photo or image
- piercing veil of acquisition subsidiary
- post asset purchase issues
- post closing covenants
- post signing asset valuation
- post-closing adjustments for pre-closing sales and services
- post-closing sales tax
- PPA v indemnification
- PPP loan
- PPP loan assumption
- pre-closing management agreement
- pre-closing operating arrangement
- pre-closing sales tax
- Pre-Suit Investigation Right
- preservation of due diligence materials
- prior-material-breach doctrine
- private credit financing
- private equity
- Privilege Access Protocol
- Problem with distributors
- Problem with Investment Banker/Broker/Finder Fee
- problem with mandatory arbitration clause
- Problem with products
- problem with prorations
- problem with purchase price adjustment
- problem with seller co-owners
- problem with seller contract
- Problem with seller lessor or landlord
- Problem with seller owner's competition
- problem with seller's owner
- problem with stock options
- Problem with Union Pensions
- Problem with Vendors and Suppliers
- Problems when business fails after closing
- Problems with Bankruptcy Auction Sales
- Problems with business records
- Problems with Competitors
- problems with condition of assets
- problems with creditors of distressed business
- problems with customers
- Problems with Deferred Purchase Price
- Problems with Deposits
- Problems with Description of Assets
- Problems with description of purchase price
- Problems with distressed business seller unexpired tenant leases
- problems with divestitures
- Problems with due diligence
- problems with earnouts
- problems with employees
- problems with escrows
- Problems with financials
- problems with financing transaction
- problems with forum selection clauses
- Problems with franchise deals
- problems with general liability insurance
- Problems with governments
- problems with indemnification notice
- problems with insurance
- Problems with intellectual property
- problems with leases
- problems with noncompetition covenants
- problems with oral M&A promises
- problems with patents
- problems with pensions
- problems with post-closing litigation in inconvenient form
- Problems with post-closing management of business
- problems with products liability claims
- Problems with Real Estate Leases
- problems with receivables
- problems with regulatory industry acquisitions
- Problems with related party contracts
- Problems with rollover equity
- Problems with sale of auto dealerships
- problems with seller nondisclosure
- problems with seller's employees
- problems with seller's lender
- Problems with seller's pre-closing errors & omissions
- Problems with seller's projections
- problems with seller's real property
- problems with seller's unemployment insurance experience rating
- problems with sharing tax benefits
- problems with simultaneous closings
- problems with subordination rights
- problems with successor liability
- problems with survival provisions
- problems with taxes
- Problems with typos
- Problems with Undisclosed Liabilities
- Problems with undocumented employees
- product line exception
- projections
- projections
- promissory estoppel
- promissory note
- prudence
- public information exclusion
- punitive damages
- purchase agreement
- purchase price
- purchase price adjustment
- Put buy infrastructure promises in writing
- quality of earnings assessment
- ratifying unassumed contract by post-closing action
- reasonably equivalent value
- receipt of buyer equity – seller protections
- receipt of buyer equity or security
- receipt of buyer equity or security
- receivables
- reciprocal Non-Disparagement Clause
- recoupment doctrine
- reformation
- reformation of contract
- regulated business
- reliance
- remote use of trademark out of territory
- representation and warranty about customers
- representations and warranties
- rescission
- rescission
- restricted offset or setoff
- restrictive post-closing covenants
- retained business carveout
- retaliation
- retention bonus
- revenue and profit projections
- reverse termination or breakup fee
- Revlon doctrine
- Right of publicity
- risk of post closing payments
- robust buyer litigation warranty in earnout deal
- robust objective buyer earnout covenants
- royalty
- S corporation
- sale leaseback
- sale of assets of business
- sale of business to ESOP
- sale of product line
- sales order
- sales tax
- sales tax imposed on equity sale of DRE
- sales tax risk
- SBA approval re PPP loan
- scienter
- scope
- Section 1377 election
- Section 363 sale
- securing buyer's note
- securing deferred purchase price
- security agreement
- sell side M&A
- seller carried purchase price
- seller knowledge
- seller owner responsibility for underreported sales tax
- seller owners equity interest in buyer
- seller ownership in buyer
- seller rep of no federal employer liability
- seller's age discrimination claims
- seller's covenants
- seller's federal injunctions
- seller's unemployment experience rating
- seller's warranty claims
- seller's workers compensation experience rating
- Selling shareholders problem with their board of directors
- severance benefits
- sexual harassment
- shareholder approval of deal
- shareholder buyout of partner
- shareholder personal guaranty of target lease
- shareholder release
- sharing transaction tax deduction benefits
- sick time
- signature escrows are risky
- signing LOI with revisions by signer
- social media transfer
- special indemnity escrow
- specific performance
- spousal consent
- state and local tax
- state approval of nonprofit hospital
- state franchise/income tax
- statute of frauds
- statute of limitations
- statute of limitations
- stay bonus
- step-down provision
- stock purchase agreement
- stock sale
- strategic acquisition
- strategic acquisition
- structure of transaction
- subordination
- substance over form
- substantially all assets
- success fee
- successor liability
- sufficiency of assets rep
- supply problems
- survival of covenants
- survival of reps and warranties
- survival period commencement
- tangible net worth
- target's stock options
- tax
- tax benefit sharing
- tax deferred reorganization
- tax penalties and additions
- Taxation
- termination of M&A agreement
- termination or breakup fee
- third party
- third party beneficiary clause
- time of the essence
- timely objection to indemnification claim
- tolling
- tolling
- tort misrepresentation in M&A
- tortious interference with prospective economic advantage
- trade secret misappropriation
- trade secret misappropriation by former seller employee
- trademark infringement
- trademarks
- transferee liability for taxes IRC Section 6901
- TRO/preliminary injunction before filing for arbitration
- tying fraud to economic loss
- typo or scriverner's error
- UCC search
- Uncategorized
- understanding private equity
- undisclosed deal term
- Uniform Fraudulent Transfer Act or Uniform Voidable Transfer Act
- union fringe benefits
- union liabilities
- unitary business
- unjust enrichment
- unliquidated or disputed claim
- unwanted assets
- vacation time
- valuation
- waiver of contractual provision
- waiver of jury trial
- waiver of removal to federal court
- waiver provision
- willful breach carveout
- willing buyer or procuring cause
- Withholding Post-closing payments
- working capital adjustment
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