Avoid costly post-closing legal battles! This post breaks down the pivotal Delaware Court of Chancery ruling, Cytotheryx, which confirmed that a broadly worded Delaware choice-of-law clause in a merger agreement applies not just to contract disputes, but also to related…
Blog Archives
When M&A Disputes Go Public: The Lesson of Broad Delaware Choice-of-Law Clauses
Posted in boilerplate provisions, choice of law provision, scope Tagged with: APA, asset purchase agreement, Choice of Law Clause, contract drafting, Contractarian Law, Cytotheryx v. Castle Creek, Deal Counsel, Defamation, Delaware Choice-of-Law, Delaware Court of Chancery, fraud claims, Governing Law Provision, Innocent Construction Rule, litigation risk, lower middle market, M&A, M&A legal, M&A Risk Management, merger agreement, Mergers and Acquisitions, Misrepresentation, Post-Closing Dispute, Predictability in M&A, Private Equity, private target, seller side M&A, SPA, stock purchase agreement, Strategic buyer, tort claims
Protecting Earnouts The Critical ‘Consistent with Past Practice’ Provision
Navigating M&A earnouts can be a high-stakes game. This blog post explores a recent Delaware court case to reveal a common but costly mistake made by sellers. Learn how a single, overlooked provision—the “consistent with past practice” clause—could have prevented…
Posted in Calculating Earnout Metrics, Consistent with past practice of acquired business, problems with earnouts Tagged with: accounting policies, Acquisition Strategy, Business Valuation, Cheffers v. Ideagen, consistent with past practice, contingent consideration, contractual provisions, Delaware court case, earnout clauses, Earnout disputes, legal advisors, legal risk management, lower middle market, M&A earnouts, M&A lawyers, M&A litigation, merger agreement, private company acquisition, Private Equity, seller due diligence, strategic buyers
The Buyer’s Blind Spot How a New York Asset Deal Can Become a Legal Trap
Navigate the hidden legal risks of M&A in New York. This post dives into the “mere continuation” doctrine, a legal trap that can expose all-cash asset buyers to a seller’s unassumed liabilities. Learn how to identify and manage the risks…
Posted in mere continuation Tagged with: asset purchase, Avamer, business law, contractual provisions, de facto merger, deal structure, escrow, holdback, Hunter Boot, indemnification, legal risk, legal risk management, lower middle market, M&A, Mere Continuation, Mergers and Acquisitions, New York law, Private Equity, strategic buyers, successor liability
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
The De Facto Merger Trap Successor Liability in Equity Rollover Asset Acquisitions M&A Stories
Navigate the often-unseen dangers of de facto merger in M&A asset acquisitions involving equity rollover. Discover how a recent court ruling reveals the critical need for proactive pre-closing measures to manage known seller liabilities, even when contractually excluded. This post…
Posted in buyer equity, problems with successor liability Tagged with: Acquisition Strategy, Asset acquisition, Buyer equity, Corporate Law, de facto merger, due diligence, equity rollover, escrow, Great Point Inc., known liabilities, legal risk, lower middle market, M&A advisors, M&A legal, NE Fibers LLC, PE deals, pre-closing steps, Private Equity, Rhode Island law, risk management, successor liability, transaction structure
Indemnity’s Paper Trail: The Unexpected Cost of Overlooking Supporting Documents in M&A
Don’t let a seemingly minor clause sink your M&A deal recovery. This crucial legal blog dissects a Delaware Supreme Court case revealing the unexpected cost of overlooking the supporting document requirement in indemnification notices. Essential reading for buyers, sellers, and…
Posted in problems with indemnification notice Tagged with: Acquisition Agreement, buyer protection, contract law, deal terms, Delaware Supreme Court, due diligence, excuse from indemnification forfeiture, indemnification forfeiture, indemnification notice, Legal Blog, legal risk management, lower middle market, M&A advisors, M&A indemnification, M&A litigation, Mergers and Acquisitions, Post-Closing, Private Equity, Risk mitigation, Seller Protection, supporting documents, transaction law
Unseen Ties: Mitigating Conflict of Interest Risks in M&A Vendor Relationships
Navigate the complexities of M&A with insights into mitigating hidden risks in vendor contracts. This article dissects a recent case highlighting the dangers of undisclosed conflicts of interest involving a target company’s insiders and key service providers. Learn practical pre-closing…
Posted in Problem with Vendors and Suppliers Tagged with: Acquisition Agreement, April 2025, Business acquisition, buyer protection, CEO conflict, conflict of interest, contractual provisions, Corporate Law, due diligence, indemnification, Indiana Court of Appeals, Legal Blog, legal risk, litigation risk, lower middle market, M&A advisors, M&A legal, M&A Strategy, medical billing, Mergers and Acquisitions, pre-closing, Private Equity, radiology services, representations and warranties, Risk mitigation, Seller obligations, software vendor, transaction law, undisclosed interest, vendor contracts, Zotec v Hulsey
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
When Private Equity’s Global Strategy Undermines Earnouts
This blog delves into the legal complexities of earnouts in private equity acquisitions, using a recent Delaware Superior Court case as a key example. It explores the risks sellers face when private equity firms orchestrate strategic decisions that negatively affect…
Posted in private equity, problems with earnouts Tagged with: Acquisition Agreements, affiliate immunity, breach of earnout, Business acquisition, buyer group, corporate group law, Delaware law, Delaware Superior Court, Earnout disputes, Earnout Provisions, earnouts, EBITDA performance, M&A acquisitions, M&A Legal Risks, PE firm accountability, PE firm liability, portfolio company, Private Equity, private equity sponsor, Punitive damages, seller protections, strategic decisions, tort claims, tortious interference
Business Seller Accuses Buyer of Earnout Manipulation
Explore a recent M&A case where a seller accused the buyer of manipulating earnings to avoid the earnout. Dive into the legal intricacies and lessons learned from Main Market Partners, LLC v. Olon Ricerca Bioscience LLC. M&A Stories May 16,…
Posted in bad faith, earn outs Tagged with: asset purchase agreement, bad faith, Business performance, Business Seller, buyer, case reference, Chemical Division, Distressed Companies, Earnings Manipulation, earnout, EBITDA, Lawsuit, Legal Blog, M&A, Main Market Partners, merger and acquisition, Middle-Market Companies, Olon Ricerca Bioscience, Post-Closing Performance, Private Equity
Recent Comments