M&A Boot Camp booklet 2023 - Flipbook - Page 83
Other Limitations on Indemnification (cont’d)
Buyer’s Mindset:
– “The bargain we’ve struck is that we would pay a full purchase price in
exchange for the target as it is represented to be in the acquisition
agreement. If the representations in the acquisition agreement turn
out to be inaccurate, we will not have gotten what we bargained for.
We want the benefit of our bargain, which is that we would get the
target as represented. We should be made whole if there are
inaccuracies that need to be remedied, and our pre-existing knowledge
of the inaccuracies is irrelevant in this context. If the agreement
makes our pre-existing knowledge relevant, then any indemnification
claim we make, no matter how clear the breach and no matter how
clear the resulting damages, will inevitably be met by an assertion that
we knew about the breach or the facts giving rise to it.”
Mitigation
Subrogation
Hogan Lovells US LLP
10