Protect your M&A deal: A missing anti-reliance clause cost a buyer six years of litigation in a Delaware earnout dispute. Learn how lower middle market buyers can use this critical pre-closing legal tool to bar seller’s extracontractual fraud claims and…
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Buyer Beware: How a Missing Anti-Reliance Clause Can Lead to Six Years of Earnout Litigation
Posted in anti-reliance clause, problems with earnouts Tagged with: Acquisition Agreement, anti-reliance clause, asset purchase agreement, business law, buyer protection, Camaisa v. Pharmaceutical Research Associates, cloud technology M&A, Court of Chancery, Delaware law, earnout dispute, earnout negotiation, extracontractual fraud, legal advisors, legal due diligence, lower middle market M&A, M&A legal risk, M&A litigation, merger agreement, pre-closing risk management, private target business, seller representations, stock purchase agreement
Earnout Deadlines: How Sellers Can Ensure Timely Dispute Resolution
Strengthen your M&A earnout protections. This analysis of the Wendella69 case demonstrates a critical flaw in relying on simple contractual deadlines for earnout delivery. Discover the precise legal strategy—utilizing “express condition precedent” and “time is of the essence” language—that sellers…
Posted in earnout dispute resolution procedure, problems with earnouts Tagged with: Acquisition Agreement, alternative dispute resolution, condition precedent, Earnout disputes, EBITDA earnout, express condition precedent, independent accountant determination, legal risk mitigation, lower middle market M&A, M&A advisors, M&A legal risk management, M&A litigation, Material breach, materiality of timely delivery, Post-closing disputes, pre-closing contractual drafting, private company acquisition, seller side M&A, time is of the essence
Protecting Earnouts The Critical ‘Consistent with Past Practice’ Provision
Navigating M&A earnouts can be a high-stakes game. This blog post explores a recent Delaware court case to reveal a common but costly mistake made by sellers. Learn how a single, overlooked provision—the “consistent with past practice” clause—could have prevented…
Posted in Calculating Earnout Metrics, Consistent with past practice of acquired business, problems with earnouts Tagged with: accounting policies, Acquisition Strategy, Business Valuation, Cheffers v. Ideagen, consistent with past practice, contingent consideration, contractual provisions, Delaware court case, earnout clauses, Earnout disputes, legal advisors, legal risk management, lower middle market, M&A earnouts, M&A lawyers, M&A litigation, merger agreement, private company acquisition, Private Equity, seller due diligence, strategic buyers
The Earnout Gap The M&A Mistake Your Client Will Pay For
Don’t let your client’s earnout disappear. This post exposes the M&A mistake sellers make by accepting vague buyer promises and offers a legal strategy to protect your client’s deal. M&A Stories August 12, 2025 When negotiating the sale of a…
Posted in problems with earnouts Tagged with: Acquisition Agreement, asset purchase, Breach of Covenant, Business owners, contract drafting, due diligence, earnouts, fraud in the inducement, legal advisors, legal risk management, lower middle market, M&A legal blog, M&A litigation, M&A negotiation, Post-Closing Performance, Primal Life Holdings, private business, protecting earnouts, rollover equity, seller's counsel, Society Brands
The Fatal Flaw in an Earnout: How a Seller Lost a Claim with the Wrong Dispute Clause
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…
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
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
M&A Earnouts on Acquired Contracts: Guarding Against Hidden Termination Risks
Protect M&A earnouts linked to acquired contracts. Understand how termination rights create hidden risks for seller payments and find pre-closing strategies for lower middle market deals. M&A Stories May 29, 2025 In lower middle market mergers and acquisitions, earnouts are…
Posted in earnout based upon revenue from at will contracts, problems with earnouts Tagged with: acquired contracts, asset purchase agreement, at-will contracts, Buyer Obligations, contract termination, contractual provisions, cybersecurity staffing, earnout protection, implied covenant of good faith, lower middle market M&A, M&A earnout, M&A litigation, pre-closing due diligence, private company sale, seller protections, transaction risk
Operational Clarity: Protecting Earnouts Beyond Financial Targets in Lower Middle Market M&A
Beyond Financial Targets: How Operational Clarity Protects Earnouts in Lower Middle Market M&A. Learn from a recent case highlighting the crucial need to address post-closing operational control in deal agreements to minimize litigation risks for buyers, sellers, and advisors. M&A…
Why Delaware’s Implied Covenant of Good Faith and Fair Dealing Is Not Enough Protection for an Earnout
In this blog post, we explore the crucial role of earnout agreements in M&A transactions and why Delaware’s implied covenant of good faith and fair dealing is not sufficient protection for sellers. A recent Delaware Court of Chancery case underscores…
Posted in Express efforts clause vs. Delaware's implied covenant of good faith and fair dealing, problems with earnouts Tagged with: Breach of contract, commercial reasonable efforts, Contractual obligations, Delaware court decision, Delaware Court of Chancery, Earnout agreements, earnout milestones, express efforts provision, good faith efforts, implied covenant of good faith and fair dealing, M&A lawyers, M&A legal considerations, M&A legal disputes, M&A negotiation, M&A seller protections, M&A transaction risks, private company deals, Private Equity, seller vulnerability, seller's rights
Earnouts and the Importance of Key Employee Retention
M&A earnouts pose significant risks for sellers, especially when buyers control post-closing business performance. This blog examines a case where a seller lost a $5 million earnout after a private equity buyer moved key employees to a separate management company.…
Posted in Key Employee Retention Requirement, problems with earnouts Tagged with: Acquisition Agreements, acquisition structuring, Breach of contract, Business acquisitions, Contract Obligations, Delaware Superior Court, earnout litigation, EBITDA targets, financial performance in M&A, key employee retention, Legal Risks in M&A, M&A Dispute Resolution, M&A earnouts, management company strategy, Post-closing disputes, post-closing employment issues, private equity acquisitions, private equity roll-ups, purchase agreement enforcement, seller protections
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