Calfee Connections

As a business owner considering a sale, there is a laundry list of things that might keep you up at night, and confidentiality is likely at or near the top of that list. A business has many different critical parties who may be concerned about the fact that the ownership is pursuing a sale, including employees, customers, and suppliers. At what point do you make them aware that a transaction is taking place?

Exploring a deal with a potential buyer will also inevitably require the Seller to share the Company’s sensitive/confidential information. What happens when a deal falls through (which, unfortunately, is not an unusual occurrence for a variety of reasons) and the potential buyer is now in possession of the Company’s confidential information? These concerns can have a major impact on the viability of a deal and on the go-forward success of the Company.

Transactions between private companies (and in some contexts where public companies are involved as well) very often include an “adjustment” to the purchase price paid by the buyer of the business. While the components of a purchase price adjustment can take many forms depending on the deal structure and the valuation method that the parties have agreed upon, the general goal of such adjustments is to ensure that the purchase price for the deal reflects the target company’s financial condition at closing.