M&A Sellers Survive Summary Judgment Challenge to $550 Million Earnout Claim that Target Founder Was Terminated Without Cause M&A Stories April 9, 2026 A lower middle market seller’s probability of receiving an earnout is increased if the target’s key management…
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M&A Sellers Survive Summary Judgment Challenge to $550 Million Earnout Claim that Target Founder Was Terminated Without Cause
Posted in earnout payable upon constructive termination, earnout payable upon termination without cause, Key Employee Retention Requirement, problems with earnouts Tagged with: constructive termination, earnout, key employee retention, Shareholder Representative Services LLC v. Nestle USA Inc, termination without cause
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- Description of business assets purchased
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- diminuation of value
- direct
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- dispute resolution procedure
- dispute resolution provision
- distressed business acquisitions
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- due diligence
- Duty to Defend
- duty to defend
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- earn out
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- earn outs
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- earnout
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- earnout dispute resolution procedure
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- earnouts based on construction milestones
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- EBITDA
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- economic loss doctrine
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- equitable contribution
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- Excluded Assets
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- misleading personal financial statement
- missing attachment to acquisition document
- modification as counteroffer
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- mutual mistake
- mutual mistake
- negligent misrepresentation
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- net working capital adjustment
- New York
- no kickback or bribe rep
- no oral modifications of contract
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- Non-Disparagement Clause
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- nonbinding
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- noncompete area
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- preservation of due diligence materials
- prior-material-breach doctrine
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- private equity
- Privilege Access Protocol
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- Problem with Investment Banker/Broker/Finder Fee
- problem with mandatory arbitration clause
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- problems with customers
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- problems with patents
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- 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
- purchase price reduction
- 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
- 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
- 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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