Contracting Around Fraud Claims in Merger and Acquisition Deals
Can a seller escape liability for fraud simply by including the right language in the merger agreement?
The target company looked great on paper. The data room painted a picture of a healthy, profitable company. The target company's officers gave all the right answers to the buyer's questions. But after the acquisition, things appear less rosy. The pre-purchase picture was inaccurate, and the buyer did not get what it paid for. And the buyer now suspects fraud. What remedies, if any, are available to the buyer?
The answer under Delaware law—which is the law most commonly applied in merger and acquisition deals—depends in large part on (a) whether the purchase agreement contains well-drafted "anti-reliance" provisions and (b) whether the inaccurate statements made to the buyer were contained in the representations and warranties of the purchase agreement or were made outside of the agreement (e.g., in documents provided in the course of the buyer's diligence or in response to the buyer's questions).
Use of the Requested Material is limited to the one-time use as described above, and does not include the right to license this Requested Material, individually or as it appears in your publication, or to grant others permission to photocopy or otherwise reproduce this material. Permission is granted to make versions for use by blind or physically handicapped persons, provided that no fees are charged.
Use of the Requested Material is granted on a non-exclusive basis and is valid throughout the world in the English language only.
If any material in the Requested Material credits another source, then you must obtain authorization from that original source.
Permission is limited solely to the text portion of the Requested Material. If any photographs, illustrations, cartoons, advertisements, etc. appear in conjunction with the Requested Material, those portions should be blocked out before reproduction, as well as text from other articles.
The reproduction of the ABA logo and/or section logos is strictly prohibited, as is the reproduction of covers and mastheads of ABA publications.
Professionals
Attorney
Attorney
Attorney
