Conflicts

An acquisition is often an important step for both buyer and seller. Negotiations have taken place, information has been shared and the transaction has ultimately been completed. Yet that does not always mean that calm returns. Especially after completion, discussions may arise about agreements, figures, warranties or expectations that turn out differently than anticipated.

What do post-acquisition disputes arise from?

Post-acquisition disputes often concern what the parties exactly agreed and what information was shared beforehand. Examples include disappointing turnover, lower goodwill, hidden liabilities or discussions about terms in the purchase agreement. Sometimes a party argues that it would not have entered into the agreement, or not on the same terms, if it had had the correct information.

Payment arrangements also regularly lead to disputes. In acquisitions, the purchase price is sometimes paid partly by way of a subordinated loan or in instalments. If the buyer later believes that the seller has breached agreements, payment may be suspended. The question then quickly arises whether that is justified and what the consequences are for both parties.

Common conflicts after an acquisition include, for example:

• disputes about warranties, for example when it later turns out that certain information about the business was incorrect or incomplete;
• disputes about indemnities, for example when a buyer wants to be compensated for risks identified in the agreement;
• breach of a non-compete clause, for example when the seller carries out activities after the transfer that compete with the sold business.

What legal options are available?

Which approach is sensible depends on the agreements in the acquisition agreement and on what happened after completion. Often, the issue concerns performance, damages or termination of agreements. In some situations, rescission of the agreement on the basis of mistake may also be relevant, although that possibility is sometimes limited or excluded in acquisition contracts.

In a conflict after an acquisition, it is important to obtain clarity quickly. What exactly does the agreement say? Which warranties, indemnities or payment arrangements apply? And which steps are sensible from both a legal and commercial perspective? LVH Advocaten helps buyers and sellers assess their position, choose a strategy and conduct negotiations or proceedings. Are you dealing with a dispute after an acquisition? Feel free to submit your situation to us. We will clearly map out your options

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