Blog Archives

S Corp Stock Seller Can Sue Buyer for Not Closing Tax Books Mid-year

Introduction An S corporation does not pay federal corporate income tax. The S corporation passes its income, deductions and credits through to its shareholders, in proportion to their ownership interest in the S corporation. The shareholders then pay income tax

Posted in allocation of preclosing taxes refunds and credits, boilerplate provisions, further assurance provision, Internal Revenue Code Section 1377 election, purchase agreement, stock purchase agreement Tagged with: , , ,

Asset Purchase of Spa Shields Buyer from Seller Employee Claim

Introduction You want to buy an existing business. You select your target business, a purchase price and payment terms. Now what? You talk to your accountant, lawyer or other adviser about how to do the deal. Your adviser asks you

Posted in purchase agreement Tagged with: , ,

Shareholders Claim Buyer Forced Distressed Business into Bankruptcy

Introduction Buying a distressed competitor may be a smart business move.  However, the means used to buy the business can have legal consequences. The deal This case involved a distressed Texas based glove maker that was a formerly a public

Posted in purchase agreement Tagged with: , , ,

Seller Did Not Need Company Landlord’s Consent to Stock Deal

Introduction Real estate can be a major asset in a company. It is very common for a company to lease their offices, stores, manufacturing facilities and distribution centers. A buyer usually wants to use the company’s real estate. If buying

Posted in purchase agreement Tagged with: , , , , ,

Buyer Bought Target Employee’s Non-compete in Merger

Introduction A company’s relationship with its employees may be the crown jewel of the business. Often these relationships are evidenced by employment agreements which contain some form of post-employment nonsolicitation and non-competition covenants. Such provisions may not be enforceable in

Posted in purchase agreement Tagged with: , , , , ,

Buyer Sues Business Seller for Bad Accounts Receivable

Introduction One of the problem assets in an acquisition can be the seller’s accounts receivable. A buyer may want to manage the risk of bad receivables by providing for a post-closing adjustment to the purchase price. The deal This case

Posted in purchase agreement Tagged with: , ,

Buyer Loses $21.6 Million Claim for Business Seller’s Exclusivity Breach

Introduction One of the first documents that is often signed between a seller of a privately-owned business and a prospective buyer is a letter of intent. That document has a nonbinding description of the key terms of a business sale.

Posted in purchase agreement Tagged with: , , ,

Court Gives Pharmacy Seller Chance to Collect Earnout

Introduction A prospective buyer and seller of a business often can’t agree upon a purchase price. One way to bridge the gap is to break down the purchase price into two pieces. A fixed amount and a contingent amount based

Posted in purchase agreement Tagged with: , ,

Court awards business seller $441K in preclosing tax refunds

Introduction It is often common when selling your company to prorate any tax refunds that relate to the preclosing. Often the buyer of the company will agree to pay to the seller any such tax refunds that the target company

Posted in purchase agreement Tagged with: , , , ,

Business Seller’s Nondisclosure of Customer Problems Cost $4.4 Million

Introduction A buyer of a company often prices the target based upon some multiple of earnings. And a key assumption in its pricing model is often the stability of the target’s relationship with its key customers. So, a buyer will

Posted in purchase agreement Tagged with: , , ,

Recent Comments