In M&A deals, earnouts can lead to a costly trap. Discover how a seller lost a multi-million dollar claim in a recent federal court case by having the wrong contractual provisions. This post breaks down the critical difference between an…
Monthly Archives: July 2025
The Fatal Flaw in an Earnout: How a Seller Lost a Claim with the Wrong Dispute Clause
Posted in earnout dispute resolution procedure, problems with earnouts Tagged with: asset purchase agreement, Breach of contract, Business owners, contractual provisions, Crest Foods v. Fat Brands, dealmaking, dispute resolution, due diligence, earnout, Earnout disputes, Franchise acquisition, franchisor, indemnification, legal advisors, legal risk, Litigation, lower middle market, M&A, Mergers and Acquisitions, Post-Closing, pre-closing, private company, purchase price adjustment, survival clause, Valuation
The Cost of Ambiguity: Protecting Retained Businesses from Overly Broad M&A Noncompetes
Discover how ambiguous language in M&A noncompete carve-outs can lead to costly post-closing litigation for lower middle market businesses. This deep dive into a recent court case highlights critical pre-closing drafting mistakes by sellers and offers actionable strategies for buyers,…
Posted in Uncategorized Tagged with: "as currently conducted" clause, Acquisition Agreement, asset purchase agreement, Business acquisition, business owner advice, Business Sale, buyer overreach, carve-out provision, contract drafting, contract language, contractual ambiguity, deal negotiation, Delaware Court, Goodwill, HVAC service business, legal advisor insights, legal risk management, litigation avoidance, lower middle market, M&A, M&A advisor, noncompete agreement, Post-closing disputes, pre-closing mistakes, private target, Restrictive Covenant, retained business, Seller Protection, skylight manufacturing
The Sandbagging Trap: Why M&A Buyers Need Explicit Protection Under California Law
This blog post explores the critical and often overlooked “sandbagging” risk for M&A buyers in California. Learn why a buyer’s knowledge of a seller’s false representation can undermine post-closing claims under California law, a stark contrast to Delaware’s pro-sandbagging stance.…
Posted in Uncategorized Tagged with: Acquisition Agreement, anti-sandbagging, Arwood v. Aw Site Services, Breach of contract, California law, contractarian, Delaware law, due diligence, Hauter v. Zogarts, indemnification, Legal Blog, lower middle market, M&A, M&A Risk Management, Mergers and Acquisitions, Private Equity, pro-sandbagging, reliance, representations and warranties, reps and warranties, sandbagging clause, Strategic buyer, Telephia
Protecting Your Earnout in a Post-Closing Seller Bankruptcy
Unlock critical insights for lower middle market M&A. This post reveals a non-obvious risk for sellers relying on earnouts: what happens when the selling entity faces post-closing bankruptcy? Learn crucial pre-closing contractual strategies to protect your earnout and navigate complex…
Posted in earnouts in bankruptcy, problems with earnouts Tagged with: APA, asset purchase agreement, bankruptcy law, Business Sale, Buyer's Perspective, Chapter 11, contingent payment, contract drafting, contract rejection, contractual provisions, Corporate Law, deal-making, distressed M&A, due diligence, Earnout Provisions, earnouts, legal advice, Legal Disputes, legal risk management, lower middle market M&A, M&A, M&A advisors, M&A litigation, Mergers and Acquisitions, negotiation strategies, Post-closing adjustments, post-closing obligations, pre-petition debt, private company M&A, Purchase Price, sale of business, seller bankruptcy, Seller's Perspective, transaction structuring, vested rights
Beyond the Balance Sheet: Why Sellers Must Confront Hidden Tax Liabilities Before a Deal
Uncover the critical pre-sale strategies that can safeguard your M&A deal. This insightful post delves into how hidden and unaddressed tax liabilities can derail transactions and lead to costly post-closing litigation for sellers. Drawing lessons from a recent Delaware Court…
Posted in problems with taxes Tagged with: Business owners, contract law, Corporate Law, deal value, Delaware Court of Chancery, due diligence, federal telecommunications tax, hidden taxes, indemnification, legal advisors, legal risk management, lower middle market, M&A, M&A advisors, M&A litigation, Mergers and Acquisitions, Post-closing disputes, pre-closing, pre-sale cleanup, private company sale, risk management, sales tax, seller due diligence, sellers, state and local tax, statute of limitations, tax cleanup, tax compliance, tax liabilities, undisclosed taxes, VDA, voluntary disclosure agreement
Recent Comments