Business Sale and Purchase Disputes
When buying a company, there is always a limit to how much you can find out about the business beforehand. Protections are often therefore put in place in the Share Purchase Agreement in the form of warranties and indemnities, allowing a buyer to make a claim to recover losses it has suffered as a result of breaches of warranties given by the seller.
Negotiations can amount to a battle over the allocation of risk between the parties and it is not until after the acquisition that it becomes clear that the amount you paid for the business was excessive. From a sellers’ point of view, when times become harder, any warranties they have provided are more likely to be put under scrutiny and claims, often spurious, must be robustly defended, particularly in circumstances where deferred consideration is being withheld by the buyer.
Our national team of specialists have extensive experience of acting for claimants and defendants in breach of warranty cases advising on issues including notification, interpretation of warranties and disclosure. The assessment of damages in breach of warranty claims is a difficult and complex area and we can advise you on whether damages can be successfully claimed as a result of the breach.
We also help our clients pursue other options such as misrepresentation (including fraud) and negligence claims against professional advisers (solicitors, auditors, accountants and surveyors) who advised on the deal.
- Following the sale of their company our clients were faced with a claim for breach of intellectual property warranties, brought by the buyer in an attempt to avoid paying a retention of over £1,000,000. We brought a counterclaim against the claimant and we able to secure an early judgment. An application was also made by us for summary judgment on the warranty claim. Our unrelenting defence of the claim and pursuit of the claimant for the sums owed to the sellers led to the claimant discontinuing. We recovered the retention in full and were able to secure agreement from the claimant that it would pay our clients’ costs.
- When the buyers of our clients’ business withheld £2.7 million deferred consideration payable to our clients under the terms of an SPA we gave tactical advice on how to secure payment as quickly as possible. It was strategically important to our clients to successfully obtain payment as soon as possible because the buyer had brought associated proceedings against our clients for alleged breach of warranties under the SPA. We successfully obtained summary judgment for our clients for £2.7 million plus costs, securing for our clients what was rightfully theirs and depriving the buyer of its “fighting fund” for the associated warranty proceedings. Payment in full was recovered.
- Following the sale of our clients’ business the purchasers alleged the purchase price was inflated by over £9 million as a consequence of alleged breaches of warranties given in the SPA by our clients. Had the purchasers succeeded in their claim it would have reduced the consideration received by our clients by 37%. We strenuously defended the claim, attacked the purchaser’s expert evidence, took every opportunity to use the rules and procedures to maintain the tactical upper hand, advised our clients to resist any inclination to make a payment to the claimants and to adopt a strategy of outright rejection of any settlement proposals made by the purchasers that involved our clients paying any money. As a result the purchasers amended their claim down to £5.3 million and then later discontinued their claim, paying our clients’ legal costs
- We represented an international company, providing oil and gas consultancy services, who in 2013 agreed to an Asset Purchase Sale of its business. Deferred Consideration in excess of £10,000,000 was not paid out to them, with the buyer alleging a variety of complex claims valuing in excess of £20,000,000. We defeated a number of interim applications and issues, to strategically place the client in the best legal and commercial position for settlement discussions, which resulted in a substantial pay-out to our clients and the warranty claims withdrawn.