Blog Archives

Buyer Can’t Stop Noncompete Payments Upon Death of the Seller of the Business

Buyer failed to convince the Alabama Supreme Court that the noncompete was a personal service contract terminable upon the death of the seller owner. M&A Stories May 12, 2021 Introduction A covenant not to compete is generally given by the

Posted in covenant not to compete, death of seller's impact upon noncompetition payments Tagged with: ,

Delaware Court Says that Acquisition Agreement Jury Waiver Not Applicable to TSA

Delaware “courts construe jury trial waivers narrowly and indulge every reasonable presumption against the waiver …” M&A Stories May 11, 2021 Introduction It is quite common for a business buyer and seller to expressly waive their right to a jury

Posted in waiver of jury trial Tagged with: ,

Indiana High Court Requires Continuity of Ownership in Successor Liability Claim

Business asset buyer not liable to seller creditor under Indiana’s de facto merger or mere continuation successor liability exceptions to the successor liability doctrine. M&A Stories April 30, 2021 Introduction Successor liability is an important issue when pricing a business

Posted in continuity of enterprise exception, continuity of ownership, de facto merger exception, successor liability Tagged with: ,

Court Says Buyer Prepared LOI That Seller Signed Is Probably Unenforceable

Although the seller signed the buyer prepared LOI, it included additional terms which were never agreed to by the buyer. M&A Stories April 30, 2021 Introduction A letter of intent (or LOI) is often used in a private deal to

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Asset Buyer Fights Claim That It Assumed Liability for Product Line Containing Asbestos

Buyer only purchased certain product lines of seller but also purchased the trade name that seller used for all product lines including a steam turbine product line that contained asbestos which the seller did not sell to the buyer. M&A

Posted in buyer assumption of seller liability, successor liability Tagged with: ,

Seller Has Post-Closing Problem with His Pre-Closing Guaranty of Target Lease

Target falters after closing and stops paying rent to its landlord. The seller sues the target and the buyers to manage his exposure because of a personal guaranty he gave to landlord.   M&A Stories    April 14, 2021   Introduction   It is very common for the owner of a company to guaranty the company’s office

Posted in shareholder personal guaranty of target lease, stock purchase agreement Tagged with: ,

Buyer Accuses Timeshare Business Seller of Signing Credit Risk Members Before Closing

Delaware Court denies seller’s motion to dismiss buyer’s claims that seller changed practice before closing by signing up customers with low FICO scores.   M&A Stories    April 13, 2021   Introduction   A buyer uses past performance and future projections to help price a target business. The

Posted in exclusive remedy, fraud carveout, fraud in business sale, fraudulent inducement Tagged with: ,

Asset Buyer Can’t Enforce Employee Nonsolicitation Covenants

Oklahoma federal court refuses to enforce several employee non-solicitation post-employment covenants because they were either non-assignable, had no term, applied to indirect solicitation or were not restricted to established customers. M&A Stories April 11, 2021 Introduction One buyer M&A risk

Posted in nonsolicitation of employees and customers, nonsolicitation of former customers Tagged with: ,

Court Permits Mere Continuation Successor Liability Claim Against Buyer

Buyer purchased assets of seller for cash including a distributor agreement. Buyer did not assume any liability for seller’s breach of the distributor agreement. The court nevertheless permitted distributor to sue the buyer for breach of the distributor agreement for

Posted in mere continuation, mere continuation exception, successor liability Tagged with: ,

Target Incorrectly Applies New Accounting Standard – May Cost Buyer $38 Million

Target’s estimate of tangible net worth at closing for purposes of a purchase price adjustment was $38 million too low because it was based upon an incorrect application of a new accounting standard. Buyer has uphill fight to avoid making

Posted in purchase price adjustment, tangible net worth Tagged with: ,

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