Earn-outs, sharks, and dolphins

The past few weeks have brought additional opinions from the Delaware courts regarding earn-outs – as Vice Chancellor Glasscock notes, a not uncommon occurrence: A recurring scenario in this Court involves disputes between buyers and sellers of entities over earn-out provisions for post-acquisition performance. The incentives peculiar to such agreements, perhaps, make disputes, if not […]

Here’s an example…

Yesterday’s decision by Vice Chancellor Slights in Greenstar IH Rep, LLC and Gary Segal v. Tutor Perini Corporation et al. (Del Ch., C.A. No. 12885-VCS) highlights the recurring (for M&A counsel) question of whether the acquisition agreement should include examples of how a particular calculation should be done. In this decision, the court faced a […]

Location, location, location

For experienced transactional attorneys, a contract to sell a business has a familiar architecture that sorts the various statements and promises of the buyer and seller by function.  An assertion that a fact is or will be true?  Put it in the part of the contract for representations and warranties.  The seller is promising to […]

More on Post-Closing Control and Earn-Outs

I observed in my prior post that the seller of a business will seldom obtain a commitment from the buyer to operate the purchase business in such a manner as to maximize the amount of post-closing contingent or earn-out payments.  There are exceptions, of course – a search of purchase agreements included in SEC filings […]

Earn-outs and control

John Jenkins at the blog highlights a recent Delaware case* where an asset purchase agreement included a post-closing contingent payment, as well as the following: “Subsequent to the Closing, Purchaser shall have sole discretion with regard to all matters relating to the operation of the Business. Purchaser shall have no express or implied obligation […]

A “Consummation” Devoutly to be Avoided

In Fed Cetera, LLC, v. National Credit Services, Inc. (3d Cir., No. 18-1243, September 17, 2019), the court was faced with interpreting the term “consummated” in a finder’s fee agreement. The finder was to identify Federal contractors with whom the defendant would seek to become a sub-contractor, with the goal of using that experience to […]