One Question Diagnostic: If your earn-out hinges on the buyer providing specific tools, staff, or technology, have you turned those promises into a mandatory contract requirement, or are you hoping their business interests will stay aligned with yours? M&A Stories…
Monthly Archives: December 2025
Secure the Buyer’s Infrastructure Commitment or Risk Losing Your Earn-Out
Posted in problems with earnouts, Put buy infrastructure promises in writing Tagged with: American Capital Acquisition Partners LLC v LPL Holdings Inc, anti-reliance clause, asset purchase agreement, buyer covenants, Contingent Payments, Deal Synergies, Earn-outs, implied covenant of good faith and fair dealing, Infrastructure Requirements, legal risk management, lower middle market, M&A Disputes, merger agreement, Post-closing integration, Revenue Targets, seller protections, stock purchase agreement, Technical Integration Risks
Don’t Let the Buyer Trade Your Earnout for Their Future Perks
One Question Diagnostic Does your contract ensure that if the buyer gets a perk for their other businesses by using your deal, that value gets added back to your earnout? M&A Stories December 29, 2025 When you sell your business,…
Are Transaction Bonuses Excluded from Your Earnout Profit Calculation?
One Question Diagnostic Tool If your earnout is tied to a profit target, does your contract explicitly state that the bonuses you pay your team for closing the deal don’t count as an expense against your payout? M&A Stories December…
Posted in Calculating Earnout Metrics, exclude transaction costs and success bonuses from profit calculation, problems with earnouts Tagged with: Accounting Definitions, Comet Systems Inc. V. Miva, Deal Litigation, Delaware Court of Chancery, Earnout Calculation Exhibits, earnout protection, Implied Duty of Good Faith, Inc., Interest on Delayed Payments, Non-Recurring Expenses, Post-closing disputes, Profit-Based Earnouts, purchase price adjustments, seller risk management, Success Fees, Transaction Bonuses, Transaction Expenses
Protecting Your Earn-Out with a Robust Buyer Litigation Warranty
One Question Executive Summary: If you are a seller looking at an earn-out offer, there is one question you must ask your advisor before you agree to a simultaneous closing: Does the buyer’s litigation representation protect me if their entire…
Stop the Buyer’s Double-Dip: Managing Simultaneous Claims for Damages and Non-Compete Extensions
This blog post explores a critical pre-closing risk management tool for sellers facing aggressive restrictive covenants in an asset purchase agreement. By examining a recent 2025 Texas case involving a youth football league, the article reveals how the combination of…
Posted in covenant not to compete, noncompete term extensions Tagged with: asset purchase agreement, business goodwill protection, business transition period, cumulative remedies, deal negotiation strategies, EBITDA-based damages, election of remedies, ethical seller advice, Larocque v. Flagco. LLC, legal risk mitigation, liquidated damages, lost profits calculation, lower middle market M&A, M&A legal drafting, M&A litigation, net profit vs gross revenue, non-compete extension, per-diem credit, Post-closing disputes, private equity buyer tactics, restrictive covenant breach, seller risk management, Texas contract law, tolling provision, youth sports business sale
Protecting Your EBITDA Earnout From Corporate Overhead Allocations and Expenses that Should Be Capitalized
This post details how sellers can safeguard their $9 million EBITDA earnouts by drafting specific exclusions for corporate overhead and ensuring labor for major projects is not improperly deducted. M&A Stories December 23, 2025 Earnouts are often a source of…
Posted in corporate overhead allocations, EBITDA earnouts, expenses that should be capitalized, problems with earnouts Tagged with: capitalized expenses in M&A, Chambers v. Genesee & Wyoming Inc., corporate overhead allocations, earnout calculation drafting, EBITDA deduction limits, EBITDA earnout protection, excluding overhead charges, labor expenditure disputes, lower middle market M&A disputes, M&A financial engineering, normal course of business expenses, post-closing earnout litigation, private business sale strategy, protecting seller earnouts, purchase agreement covenants, target company financials
Freezing Your Retained Business in Time: A Critical Non-Compete Carve-Out Mistake
A recent U.S. Delaware District Court ruling, Lennox AES Holdings LLC v. Benton, reveals a hidden danger in partial exits: allowing a non-compete to freeze your retained business in time. This analysis explains how the common phrase “as currently conducted”…
Posted in defining retained business by category not as currently conducted, restrictive post-closing covenants, retained business carveout Tagged with: Asset Purchase Agreement drafting, avoiding M&A litigation, business transition planning, defining business scope vs status quo, HVAC and construction industry M&A, Lennox AES Holdings LLC v. Benton, lower middle market M&A, M&A carve-out provisions, managing retained entities, non-compete agreement mistakes, non-compete injunctions, partial exit strategies, post-closing product line restrictions, pre-closing legal risk management, protecting future revenue streams, restrictive covenants in business sales, retained business rights, retained skylight business, seller competitive restrictions, strategic buyer disputes, U.S. Delaware District Court M&A litigation
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