Archives: Business Law

The earn-out, which ties part of the purchase price to the post-closing performance of the acquired company, can bridge a valuation gap and get a deal across the finish line. Unfortunately, it is also one of the clauses most likely to trigger post-closing litigation. When targets miss metrics, everyone grabs a lawyer instead of a calculator. The roadmap below shows how to keep your earn-out on track. It includes practical drafting tips, a model schedule, and a concise dispute-resolution clause that can slot directly into your Purchase and Sale Agreement. 1. Why Earn-Outs Blow Up Earn-out fights usually spring from…

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Whether you’re an entrepreneur looking to sell your company or an investor aiming to acquire a business, understanding term sheets is essential. A term sheet is a non-binding document that outlines the key terms and conditions of a proposed business deal. It serves as a blueprint for the more detailed, legally binding agreements that will follow. Note: Although term sheets are typically referred to as non-binding (I even did so in the paragraph above), some clauses in the term sheet may create legal obligations, so be sure you understand where those obligations may arise. This is often where transaction-based law…

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Businesses based in California have been barred, in most cases, from enforcing noncompete clauses against former employees for over 150 years. But most other states still allow employee noncompete clauses. Last week, however, the Federal Trade Commission (FTC) announced a new rule that would ban most noncompete clauses nationwide. The rule is not in effect as of the date of this post. It would go into effect 120 days after the rule is published in the Federal Register. However, the rule has already been subject to legal challenges, so it’s possible courts may delay the rule’s implementation and either strike…

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Whether you’re looking to sell your business or acquire a new one, the letter of intent (LOI) is a critical early step in the transaction process. This non-binding document lays the groundwork for the deal, outlining the key terms and conditions that both parties agree to before proceeding to more intensive due diligence and negotiations. From the purchase price and financing structure to contingencies and exclusivity periods, the LOI serves as a roadmap for the final purchase agreement. It’s an essential tool for ensuring both the buyer and seller are aligned on the essential elements of the deal. Transaction based-legal…

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