This is a follow up post on our series of merger and acquisition issues. If you are selling your company you’ll be faced with the prospect of indemnifying the purchaser for any damages they suffer in connection with the sale. Now such indemnification may arise for a number of reasons, such as an unknown debt or lien that was on an asset you sold, a claim that an employee or third party made against the company or an asset which you did not inform the purchaser of, or a number of other issues. These are usually breaches of the representations and warranties that sellers have to make to the buyers in the asset purchase agreement. For example, the seller will represent (i.e. state as true at the time of signing or closing or both) that there are no debts owed by the company or liens on the company assets. If the deal closes and a lender or lien of the company did exist, its a breach of that representation, and the seller is liable to the buyer for any resulting damages.
Following up on the series of posts addressing issues in mergers and acquisitions, I did a guest post over on my friend’s blog which discussing how to negotiate and position yourself (as a seller) with respect to a situation where an acquirer is proposing or requiring a holdback payment. Holdbacks are becoming more and more common in a number of industries.
We are going to be doing a series of posts on issues that arise in most mergers and acquisitions. In this post I am going to discuss what “sandbagging” is with respect to an M&A deal and how to prevent it.
We’re going to start a new series of posts on legal and business guides, treatises and books. First up is PLI‘s Health Care Mergers and Acquisitions Answer Book 2014.
PLI recently provided me a copy and I’ve used it in connection with a recent acquisition and generally for information needed for counseling a health care client. The book provides insight into general counseling of clients in the industry, including compliance, business and accounting/tax issues. It’s useful for more than simply M&A type work.
The way the book is set up is different than most legal texts (i.e. info dump) which is refreshing – it is called an “Answer Book” after all and is therefore comprised of answers to the most common questions about health care generally, M&A transactions generally and M&A transactions in the health care context. It also has information on the typical structure of these types of transactions, as well as case studies in the important precedent applicable. Case law is inserted throughout for general propositions.