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Splitting the Difference: "Earnouts" in Business Sales (Teleseminar)
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Splitting the Difference:

1 CLE hour

1/27/2015
When: 01/27/2015
1:00 PM to 2:00 PM
Contact: (404) 521-0781


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Splitting the Difference: "Earnouts" in Business Sales - 1 CLE hour

The most highly negotiated provision of most transactions is price. Sellers want to maximize the value of the deal, putting the most optimistic spin on recent and projected results – revenue, income, customer or transactional growth, or other metrics.  Sellers, understandably, take a more skeptical view, questioning the sustainability of growth and the accuracy of forecasts.  When differences over valuation and price cannot be bridged, the parties may take a “wait and see” or “show me” approach, agreeing to a lower price than the seller wants now but agreeing to additional post-closing payments from the buyer if the company meets certain forecasts or metrics over time.  These so-called “earnouts” can be effective mechanisms for splitting the difference, putting off ultimate disposition, and closing a deal.  But they can also – and often are – be fertile sources of lengthy litigation.  This program will provide you with a practical guide to effective drafting of “earnouts” in business sales and a guide to avoiding litigation traps.

“Splitting the difference” – using “earnouts” to defer ultimate sales price and yet close a deal now
Review of most highly negotiated – and litigated – provisions in earnout agreements 
Post-closing operations – control by buyer, but informational access to seller
Defining key metrics – objective, measurable and potential traps
Relationship of earnouts to senior debt and other preferential returns
Debt issues and how it impacts financial results – and post-closing payments
How earnouts are different than escrow and holdbacks
Spotting litigation red flags
Talking to clients about the real risks of earnouts

Speaker:

Robert Wollfarth
is of counsel in the New Orleans office of Baker, Donelson, Bearman, Caldwell & Berkowitz P.C, where he represents large and small clients across the country with a wide variety of business matters. His practice includes start-up formation, mergers and acquisitions, federal, state and local tax planning and controversy, financing projects and operations, restructuring, buy-outs and dissolution. He has written and spoken extensively on business and tax planning topics.  Mr. Wollfarth received his B.S. from Tulane University and his J.D. and LL.M. from New York University School of Law.
 

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