Seeking deal costs after fraud found in diligence?

by a searcher

1 year ago

I recently had a deal that we discovered fraud and large hidden liabilities during due diligence towards the end of the finish line. The deal is not going to be able be underwritten with potential liabilities being worth more than enterprise value. Do we have a right to go after the seller and investment banker for dead deal costs?

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25 comments

searcher from Kansas State University

I usually include a breakup fee clause that says that if either party backs out of the deal, they owe the other party for expenses (legal fees, etc) incurred from the due diligence process.

1 year ago | like reply | 0 likes

intermediary from University of Richmond

You probably don't have recourse with the investment banker. Would assume business offering documents had disclaimers holding the banker harmless and not liable for information presented.

1 year ago | like reply | 0 likes

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