I worked on a merger for a client this spring. They were selling to another company in a deal that appeared almost too good to be true. A few weeks after the deal closed, management changed at the buying company and the buyer began threatening litigation, claiming a failure of my client to disclose all material facts with regard to the transaction. It's important to note that the selling company had a handful of contracts, no employees, and less than a year of operating history. The sellers entered into this agreement trusting that the buying company was acting in good faith and was shocked by the allegations when they arose. There's nothing to the allegations but the buyers want to get out of this deal (which may have been too good to be true for the sellers) and are willing to threaten a long, drawn out litigation with the sellers, whether or not they have any grounds to support their allegations. My client believes it likely would win any litigation but, again, the cost of doing so is outrageous. The parties are now trying to figure out how to back out of the deal as litigation is not practical for any of the parties.
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