Business Acquisition Disputes

Mergers and acquisitions are a transformative time for businesses, offering a new direction, potential and growth. Disputes occur for many reasons, including but not limited to:

• Regulatory environments: Disagreements may arise when the acquisition is in two different regulatory environments. An acquiring company may need to meet permit and licensing requirements that they do not have to meet in their own state or country. An attorney can review the regulatory environments and help all parties understand what regulatory requirements must be met to make the acquisition go through with as few disagreements as possible.
• Purchase price: Due diligence and differing valuation methodologies often lead to purchase price adjustments that stakeholders dispute. The price may also be adjusted due to certain tax matters or debt, and negotiations will help all parties come to an agreement on the price based on all underlying factors.
• Shareholder disputes: Business acquisition disputes often arise when shareholders feel the value of the business and each corresponding share is too low. Disagreements may allege a breach of fiduciary duty or a conflict of interest leading to a lower sale price.
• Earn-out disputes: Agreements often have earn-out provisions built into them, with a portion of the sale price linked to future performance. Disagreements with earn-out terms are common because the buyer can purposely stop the earn-out from being achieved.
• Closing conditions: Acquisitions include closing conditions that must be met by all parties before the transaction is completed. If either party fails to hold up its end of the conditions, it can lead to disputes and allegations that one party failed to meet obligations.

Business acquisitions involve intensive negotiations and some compromise from both parties. If you’re willing to compromise on some terms, an agreement that satisfies all parties and shareholders is possible.

If disputes occur, they need to be remedied as rapidly as possible. Litigation may not be in your best interest and causes an acquisition to lead to:

• Higher financial costs due to legal and court fees
• Damage to your business reputation and negative publicity
• Loss in consumer and shareholder trust
• Internal conflicts among shareholders

We’ll work with you to understand your acquisition goals and help you resolve disputes as quickly as possible. If a dispute cannot be remedied, we’re prepared to follow the legal process to the end, even if that means going to trial to protect your best interests.

Business litigation is an intricate area of the law and is difficult to navigate without the guidance of an experienced business litigation attorney.

While the process will vary from one case to the next, acquisition disputes will often follow the steps below:

• Pre-litigation procedures might involve fulfilling administrative requirements or participating in pre-litigation demands and negotiations.
• File a formal lawsuit outlining your claim and the damages you are seeking.
• Pre-trial motions and discovery. Either party can use motions to request orders, rulings, or direction in the lawsuit. They may be used to dismiss the lawsuit. Discovery will involve the exchanging of information relating to evidence and witnesses to be used in trial.
• Arbitration or mediation. Both processes aim to settle the matter before reaching the courtroom.
• Trial. Both parties present their arguments and evidence, and the court decides on the matter.

Once we have a clearer understanding of your dispute, we can help you understand what to expect when resolving the matter.

Business acquisition disputes are rarely simple and straightforward, but generally, there are three primary potential outcomes:

Settlement

In many cases, business disputes are settled and resolved outside the courtroom. If both parties can come to an agreement, then settling may be the best strategy. For example, in cases of post-closing disputes, a settlement may involve monetary damages. Settlement can occur anytime along the timeline of the conflict resolution process.

Judgment

If both parties cannot come to a settlement agreement, litigation may be the next response.

In this case, the court will decide on the matter, and a judgment may be awarded.

Dismissal

If the court finds that there is insufficient evidence to support the plaintiff’s allegations, the case may be dismissed.

Business acquisition disputes are complex. The time it takes to resolve your dispute will depend on several factors, but it is rarely a quick process.

Many disputes are resolved before they reach the courtroom, but in some cases, litigation is the best route to settle the matter.

While courts have processes in place to speed things up, you can expect your dispute to take at least 1-2 years to be resolved. Every lawsuit is different, but litigation takes time.

At Hone Law, we take every measure possible to resolve matters as quickly as possible, but many factors are out of our control.