Michael Pass

Michael Pass

Earnouts: Pitfalls for the Unwary Seller

Earnouts can bridge valuation gaps in M&A deals, but careful drafting is crucial. Sellers should negotiate clear calculation methodologies, specific covenants for the buyer's post-closing operation of the business, and robust dispute resolution procedures. Proper structuring of earnout provisions can help manage seller expectations and reduce the likelihood of future disputes.

The Process of Buying or Selling a Business: M&A Letters of Intent

This article discusses the memorialization of purchase offers in a letter of intent (LOI) in M&A transactions. An LOI outlines key terms of the deal but is non-binding. It includes provisions like exclusivity, confidentiality, expenses, and non-solicitation that may be binding. Careful drafting is essential to avoid potential risks. Properly considered, an LOI is a valuable tool for M&A deals, guiding parties through negotiations with caution.