Seller Breach of Contract

searcher profile

June 17, 2024

by a searcher from University of California, San Diego in Portland, OR, USA

We recently had the unfortunate situation where post-closing it was discovered that the Seller made material and repeated misrepresentations surrounding the liabilities of the business. Through structure, we've been able to mitigate the exposure but this has created a delicate situation, especially with enterprise customers. Does anyone have experience making the decision surrounding the trade-offs of unwinding a transaction vs. litigation. The breaches are numerous and clear cut - however, we are sensitive to the time and cost of pursuing litigation. Thank you.

0
6
166
Replies
6
commentor profile
Reply by a professional
from Dartmouth College in Los Angeles, CA, USA
It's not just question of breaches but also provable damages and the language in your purchase agreement surrounding indemnification and "losses". And whether you can set off against a seller note. You'll need to talk to a litigator in the state of the governing jurisdiction to get into specifics about likely success and merit of bringing a claim. Sounds like you likely have a claim, it really comes down to damages as to whether it's worthwhile. Unwinding a transaction is very unlikely unless you specifically included that remedy in your purchase agreement.
commentor profile
Reply by a professional
from Loyola Marymount University in Menlo Park, CA, USA
Sorry this advice comes "after the fact" but there is an M&A related insurance product that protects Buyers from Seller Fraud and is simple to secure and affordable. The policy is known as "Buyer Protect" and covers Buyers for financial loss as a result of Sellers knowingly misrepresenting or not disclosing information to Buyers in the Seller Reps in a purchase agreement. If you want more information, please ping me at redacted
commentor profile
+4 more replies.
Join the discussion