News & Analysis as of

Merger Agreements Breach of Contract Earn-Outs

J.S. Held

[Webinar] Post-Merger & Acquisition Dispute Resolution - December 7th, 12:30 pm - 1:30 pm EST

J.S. Held on

Global Investigations expert Frank Lazzara, CPA, CFF, ABV, CFE, and Economic Damages & Valuations expert David Golbahar, CPA, CFF, CGMA, will present a one-hour* course, which will cover: - An overview of purchase price...more

Morris James LLP

Chancery Holds That Claim Based on Purposeful Tanking of Merger Agreement Earnout Is Breach of Contract Claim

Morris James LLP on

Shareholder Representative Services LLC v. Albertson’s Companies, C.A. No. 2020-0710-JRS (Del. Ch. June 7, 2021) - Many merger agreements include earnout provisions under which the stockholders in the acquired company are...more

Stinson - Corporate & Securities Law Blog

Buyer Potentially Liable for Earnout Even Though it had Right to Operate Target in its Discretion

In Shareholder Representative Services LLC v Albertsons Companies, Inc., the aggrieved former shareholders of DineInFresh, Inc., d/b/a Plated, sought recovery of earnout consideration from Plated’s acquirer, Defendant,...more

Morris James LLP

Chancery Refuses to Enforce Alleged Contractual Rights Not Obtained at the “Negotiating Table”

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Obsidian Fin. Grp., LLC v. Identity Theft Guard Solutions, Inc., C.A. No: 2020-0485-JRS (Del. Ch. Apr. 22, 2021) - Delaware is “more contractarian” than many other jurisdictions. Accordingly, as this case illustrates, a...more

Faegre Drinker Biddle & Reath LLP

Make Sure the Language in Your Earnout Provision Accounts for the Obstacles to Receiving Those Future Payments

In M&A transactions, the buyer and seller often disagree about the value of the business or asset being sold. A popular solution is an earnout clause that entitles either the seller or buyer to future payments from the...more

K&L Gates LLP

Earn-Out Provision Of Merger Agreement Requires Extrinsic Evidence To Aid Interpretation

K&L Gates LLP on

In Western Standard, LLC, v. SourceHOV Holdings, Inc. and Pangea Acquisitions, Inc., C.A. No. 2018-0280-JRS (Del. Ch. July 24, 2019), the Delaware Court of Chancery (the “Court”) refused to the grant SourceHOV Holdings, Inc....more

Morris James LLP

Chancery Denies Motion to Dismiss Claim for Breach of Earn-Out When Unable to “Divine any Meaning” From Provision

Morris James LLP on

Western Standard, LLC v. SourceHOV Holdings, Inc., C.A. No. 2018-0280-JRS (Del. Ch. July 24, 2019). Defendant Pangea acquired BancTec through a merger agreement that provided for an earn-out to former BancTec stockholders...more

A&O Shearman

Delaware Court Of Chancery Denies Motion To Dismiss Breach Of Contract Claim For Failure To Use "Commercially Reasonable Efforts"...

A&O Shearman on

On December 28, 2018, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery declined to dismiss a breach of contract claim brought by former stockholders of Ception Therapeutics, Inc. (“Ception”) against...more

Morris James LLP

Court Of Chancery Favors Plain Language In Earn-Out Dispute And Declines To Imply Contractual Terms

Morris James LLP on

Greenstar IH Rep. LLC v. Tutor Perini Corporation, C.A. No. 12885-VCS (Oct. 31, 2017) - With every contract under Delaware law comes the obligation to not act so as to deprive the counter party of the benefit of its...more

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