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A substantial portion of our commercial litigation practice has involved representing private equity and other firms in connection with post-closing disputes following merger and asset purchase transactions. This litigation has encompassed a variety of industries and legal theories, including breach of contract, fraud and statutory claims. These cases address various types of contract provisions, including representations and warranties, working capital adjustments, earn-out provisions, covenants, and indemnification provisions. We have represented clients in these lawsuits as both plaintiffs and defendants. Examples of the many cases we have handled include the following:
- We represented a private equity firm that had been sued for breach of representations and warranties after the sale of a manufacturing business. The claims at issue involved a number of complex accounting issues in warranted financial statements. The plaintiff, another large private equity firm, sought damages at its imputed purchase price multiple. After aggressive discovery and motion practice, the case settled for a fraction of plaintiff’s pre-litigation demand and for far less than projected defense costs.
- Our client, a private equity firm, acquired a large industrial company. Initial EBITDA results were a fraction of pre-acquisition forecasts. Moreover, the seller – another private equity firm – was demanding a large working capital adjustment. We pursued litigation against the seller, developing creative theories to avoid strict contractual release provisions and indemnity caps. After we prevailed on early dispositive motion, we negotiated an extremely favorable settlement.
- Our client transferred control of a consumer goods business to a large private equity firm, but retained minority ownership interest. We were retained after the underlying company’s financial performance plummeted, due in part to significant and questionable conduct on the part of new management. We were able to negotiate a transaction for the sale of the minority interest at a price that far exceeded valuations.
- We have represented private equity and other clients in cases involving refusals to engage in good faith bargaining following the execution of a letter of intent or term sheet.
- After our client sold a financial services firm, the seller asserted fraud and contract claims in an effort to avoid paying amount due under an earn-out provision. The claims at issue involved complex accounting issues concerning revenue recognition and accounting reserves. After discovery and motion practice, we were able to leverage a favorable settlement for our client.
- We represented the buyer of a multi-million dollar company against the seller in an arbitration before the American Arbitration Association. On behalf of the buyer, we asserted that the seller breached the terms of the asset purchase agreement by, among other things, overstating the EBITDA calculations, misrepresenting the nature of the assets being purchased, and having liabilities that exceeded the limits imposed by the agreement. We obtained a favorable settlement for the buyer prior to the arbitration hearing.
- We represented a Chicago trading company in a dispute with two former executives who claimed damages of over one hundred million dollars. The dispute arose out of a complex transaction in which the company sold portions of its businesses to a third party and, as part of the transaction, various employees of the company sold their interests in a related company to the same third party. The litigation centered on the former employees’ allegations they had oral employment agreements with, and ownership rights in, the trading company, the scope of waivers the former employees signed as part of the transaction, and the meaning of the representations given by the former employees in transaction documents. We replaced a major Chicago firm on the case after most of the discovery had been completed, and uncovered critical evidence that led to a favorable settlement.
- We are currently representing a client in a dispute over allocation of the purchase price from the sale of a business valued at hundreds of millions of dollars. After our client sold most of its operations, two former employees claimed they owned rights in certain intellectual property conveyed in the transaction and so were entitled to a share of the purchase price. We filed a complaint for declaratory judgment seeking a ruling that our client owned all the relevant intellectual property and that the former employees are entitled to none of the proceeds from the sale. The case is set for trial.
- We represented a technology firm in the financial industry in a dispute concerning the acquisition of a competitor. Our client acquired a substantial stake in the competitor and options which would permit it to acquire the remaining interests. It later discovered the competitor had made material misrepresentations concerning the true state of the company’s financial condition and the sophistication of its software applications in order to induce our client to enter into the purchase agreement. We prevailed on a motion for temporary restraining order and in a contest concerning the appropriate forum for the litigation.
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