Corporate and M&A

By: Gerry Halpenny and Jennifer McGuire
LK Shields Solicitors (Ireland)

A recent case in the UK shows the importance of agreeing provisions relating to earn-out mechanisms in the sale of a company or business.

Gerry Halpenny and Jennifer McGuire explain.

A recent English case, Porton Capital Technology Funds & Ors v 3M UK Holdings Ltd & Another (November 2011), considered a claim by the sellers that the purchaser had breached certain undertakings in a share purchase agreement (SPA) relating to the conduct of the target company's business during the earn-out period. The English High Court also looked at whether the purchaser's termination of the target business during the earn-out period constituted a repudiatory breach of the SPA. As part of its consideration, the court considered whether the sellers had unreasonably withheld their consent to this termination. Click here to read entire article.