Discover why winning a technical legal argument in M&A can still result in costly litigation. This analysis of the Novolex case explains why lower middle market sellers must disclose material customer losses—specifically regarding purchase orders versus binding contracts—to avoid post-closing disputes, fraud claims, and Representation…
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Winning the Contract Argument but Losing the War: Why M&A Sellers Must Disclose Customer Losses Even When Not Technically Required
Posted in customer and supplier rep, problems with customers Tagged with: Breach of contract, customer concentration risk, Delaware M&A litigation, disclosure schedules, distribution business M&A., equity purchase agreement, lower middle market M&A, M&A Due Diligence, M&A fraud claims, master vendor agreement, Material Relationships representation, New York Supreme Court M&A decisions, Novolex Holdings LLC v. Illinois Union Ins. Co., post-closing litigation, pre-closing risk management, private target acquisitions, purchase orders vs contracts, representation and warranty insurance, RWI coverage denial, seller disclosure obligations, selling a manufacturing business, stock purchase agreement, strategic buyer disputes, voluntary disclosure strategy
The “Freight-In” Blind Spot: You Can’t Fix What You Don’t Diagnose
Discover how a hidden “goods in transit” accounting error triggered a post-closing fraud lawsuit for a lower middle market seller in the FeraDyne Outdoors v. Reaser case. This post analyzes the dangers of relying on informal email assurances and historical…
Posted in Problems with financials Tagged with: accounting dispute resolution, accrued expenses, asset purchase agreement, Breach of contract, Business Valuation, Delaware Superior Court, distribution business sale, EBITDA definition, entire agreement clause, FeraDyne Outdoors v. Reaser, freight-in costs, GAAP compliance in M&A, goods in transit accounting, integration clause, inventory liability, legal risk management tool, lower middle market M&A, M&A Due Diligence, M&A fraud allegations, manufacturing M&A, post-closing litigation, pre-closing risk management, private equity buyer, purchase price dispute, quality of earnings, seller representation, specific accounting principles, targeted financial review, unrecorded liabilities, working capital adjustment
Does Your M&A Choice of Law Provision Cover Statutes of Limitation?
When a deal goes wrong, does your M&A contract protect you? Learn a crucial, non-obvious mistake about choice of law and statutes of limitations that can leave buyers and sellers vulnerable, and discover the simple contractual fix to protect your…
Posted in boilerplate provisions, choice of law provision, statute of limitations Tagged with: Breach of contract, choice of law provision, Contractual Remedies, Delaware law, equitable tolling, fraud in the inducement, legal risk management, lower middle market, M&A advisors, M&A contracts, M&A Due Diligence, M&A law, M&A litigation risk, M&A mistakes, Mergers and Acquisitions, New York law, pre-closing legal strategy, private target businesses, statute of limitations
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
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
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
Wisconsin Court Examines M&A Survival Clause
Explore the complexities of M&A survival clauses in our latest blog post, ‘Wisconsin Court Examines M&A Survival Clause.’ This insightful analysis delves into a recent Wisconsin appellate court decision involving a strategic acquisition dispute. The case uncovers the critical role…
Posted in survival of reps and warranties Tagged with: ABA Model Asset Purchase Agreement, Appellate court ruling, Asset purchase agreements, Breach of contract, Business acquisition, Business disputes, business law, buyer protection, case law review, Commercial Law, commercial litigation, contract interpretation, legal analysis, Legal disputes in M&A, legal insights, Legal Precedents, M&A best practices, M&A law, M&A litigation, M&A Transactions, representations and warranties, Seller liability, strategic acquisition, strategic water distribution acquisition, survival clauses, undisclosed liabilities, Wisconsin appellate court, Wisconsin state court
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