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
The Importance of Due Diligence When Acquiring a Business in a Regulated Industry
Navigating the complex landscape of acquiring a business in a regulated industry can be a minefield without thorough due diligence. In our latest post, we delve into the critical importance of meticulous pre-acquisition audits to ensure compliance with stringent regulations…
Posted in problems with regulatory industry acquisitions Tagged with: broker-dealer compliance, Business acquisition risks, business law, compliance audits, corporate acquisitions, due diligence, Eischen v. Adaptation Financial Advisers Inc., federal securities regulations, financial industry regulations, investment firm acquisition, investment firm litigation, Legal compliance, legal due diligence, legal risk management, M&A, M&A litigation, Mergers and Acquisitions, pre-purchase audits, regulated industries, securities laws
Recent Posts
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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
- When “Telling the Truth” Destroys Your Reputation: The “Safe Harbor” Fix Every Business Seller Needs
- The “Cash Hostage” Squeeze: The Strategic Pivot to a Restricted Setoff
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- arbitration
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- arbitration vs expert determination
- asbestos claims
- asset buyer's assumption of seller's liabilities by contract
- asset purchase
- asset purchase agreement
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- asset vs stock deal
- Assignment
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- attorney client privilege
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- bad faith
- bankruptcy sale
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- bitcoin
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- boilerplate provisions
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- book value adjustment
- books and records rep and warranty
- boot
- boot
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- breach of contract
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- breach of representations and warranties
- breach of seller's covenants
- business cards
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- buyer assumption of seller liability
- Buyer beware
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- buyer equity
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- Buyer payment of seller retained liabilities
- buyer representations and warranties
- buyer's assumption of seller liabilities in asset acquisition
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- buyer's stock as currency
- buying distribution business
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- California
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- choice of law provision
- claim against seller's liability insurance
- closing
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- commercially reasonable efforts
- common interest doctrine
- compliance with all applicable laws
- compliance with law
- conditions to closing for buyer's benefit
- consent to assignment
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- Consistent with past practice of acquired business
- constructive knowledge
- constructive knowledge
- continuity of enterprise exception
- continuity of ownership
- contracts
- contravene strong state public policy
- controlling shareholder fiduciary duty M&A
- copyrights
- corporate overhead
- covenant not to compete
- Covenants
- customer and supplier rep
- customer deposits
- customer due diligence
- customer list
- customer list
- cybersecurity risks
- damages
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- death of seller's impact upon noncompetition payments
- deferred closing
- Delaware
- deliberate fraud carveout
- denial of consent must be reasonable
- dental practice sale
- Description of business assets purchased
- determination of purchase price adjustment
- diminuation of value
- direct
- director and officer duty of care
- director liability
- directors and officers insurance policy
- discharge in bankruptcy
- disclosure schedule
- discounted cash flow or DCF
- dispute resolution procedure
- dispute resolution provision
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- divestitures
- doing deal with company's officer or director
- due diligence
- duty to defend
- Duty to Defend
- Duty to negotiate in good faith
- duty to warn
- earn out
- earn out dispute procedure
- earn outs
- Earned customer deposits
- earnout
- earnout as ownership interest in buyer
- earnout based upon revenue from at will contracts
- earnout dispute resolution procedure
- earnouts in bankruptcy
- EBITDA
- EBITDA
- economic loss doctrine
- employment agreement
- employment agreement
- enforce against nonparty
- enforceability of non-owner noncompete
- entire fairness
- environment representations and warranties
- environmental
- environmental problems
- environmental remediation
- equitable contribution
- equitable estoppel
- escrow
- Excluded Assets
- excluded liabilities
- excluded or retained liabilites
- exclusive remedy
- exclusivity provision
- excuse for untimely indemnification claim
- executory contracts
- Express efforts clause vs. Delaware's implied covenant of good faith and fair dealing
- extension by contract in Delaware
- extension of closing
- extra-contractual fraud
- F reorganization
- failure to make timely purchase price payment
- fair insider deal
- Family and Medical Leave Act
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- fee based upon buyer debt assumption
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- for cause termination
- force majeure
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- forum selection clause
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- full disclosure rep
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- further assurance provision
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- Guaranty
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- handshake redemption obligation
- hinder, delay or defraud
- hiring seller's employees
- hybrid noncompetes
- implied assumption of seller contract/liability
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- indemnification cap
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- Intellectual Property
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- leases
- leases
- letter of intent
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- M&A agreement
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- material
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- membership interest purchase agreement
- mere continuation
- mere continuation exception
- merger
- merger agreement
- midco transaction
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- misappropriation of likeness
- misleading personal financial statement
- missing attachment to acquisition document
- modification as counteroffer
- multi-employer pension plan
- mutual mistake
- mutual mistake
- negligent misrepresentation
- net working capital adjustment
- New York
- no kickback or bribe rep
- no oral modifications of contract
- no pending government investigations or inquiries
- no solicitation of seller employees
- No Undisclosed Liabilities
- Non-Disparagement Clause
- non-reliance clause
- nonbinding
- nonbusiness income
- nonbusiness income/sale of subsidiary
- noncompete area
- noncompetition covenant
- noncompetition covenant term
- nondischargeable debt in bankruptcy
- nondisclosure agreement
- nondisclosure provision
- nonqualified preferred stock
- nonsolicitation of employees and customers
- nonsolicitation of former customers
- note payment amount adjustment
- notice
- notice provision
- objection -reasonable detail
- officer duty of care
- offset or setoff provision
- offset right
- One class of stock
- oral contract
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- ordinary course of business
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- owner liability for company breach of financing deal
- Ownership of Target Law Firm File
- parol evidence rule
- patents
- payroll tax
- percentage of purchase price
- permits and certificates
- personal goodwill
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- Personal Name
- photo or image
- piercing veil of acquisition subsidiary
- post asset purchase issues
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- post-closing sales tax
- PPA v indemnification
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- pre-closing sales tax
- preservation of due diligence materials
- prior-material-breach doctrine
- private credit financing
- private equity
- Privilege Access Protocol
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- problem with mandatory arbitration clause
- Problem with products
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- problem with purchase price adjustment
- problem with seller co-owners
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- Problem with seller lessor or landlord
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- Problems when business fails after closing
- Problems with Bankruptcy Auction Sales
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- Problems with due diligence
- problems with earnouts
- problems with employees
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- Problems with financials
- problems with financing transaction
- problems with forum selection clauses
- Problems with franchise deals
- problems with general liability insurance
- Problems with governments
- problems with indemnification notice
- problems with insurance
- Problems with intellectual property
- problems with leases
- problems with noncompetition covenants
- problems with oral M&A promises
- problems with pensions
- problems with post-closing litigation in inconvenient form
- 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 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 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
- 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
- retaliation
- retention bonus
- revenue and profit projections
- reverse termination or breakup fee
- Revlon doctrine
- Right of publicity
- risk of post closing payments
- 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
- 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
- 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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