Business and Share Purchase Disputes
Buying or selling a business is a major commercial transaction. When information proves inaccurate, liabilities emerge or payments are withheld after completion, the financial consequences can be substantial.
At Preston Redman, our Commercial Dispute Solicitors advise buyers, sellers, shareholders and companies on disputes arising from share purchase agreements, asset purchase agreements and related transaction documents.
We analyse the contractual framework, disclosure process and evidence to identify available claims and defences. Our advice is practical and strategic, with early attention given to contractual notice provisions and limitation deadlines.
Common Business and Share Purchase Disputes
Post-completion disputes frequently concern what was promised, what was disclosed and how the purchase price should be calculated. We advise on:
- Breach of warranty claims
- Claims under contractual indemnities
- Misrepresentation and alleged non-disclosure
- Completion accounts and purchase price adjustments
- Earn-out and deferred consideration disputes
- Tax covenant and tax indemnity claims
- Hidden liabilities and inaccurate financial information
- Breach of restrictive covenants
- Claims concerning assets, stock, customers or employees
- Disputes over escrow or retention monies
Frequently Asked Questions
What is a warranty claim?
A warranty is a contractual statement about the target business, commonly covering accounts, assets, contracts, employees, litigation, tax and compliance. If a warranty was untrue when given and the buyer suffered recoverable loss, a breach of warranty claim may arise.
The agreement will often contain detailed limits on liability, including financial thresholds, time limits, notice requirements and exclusions. Compliance with those provisions can be decisive.
How is an indemnity different from a warranty?
An indemnity is generally a promise to compensate for a specified liability or loss if the identified risk materialises. The wording determines the extent of recovery. Warranty damages usually seek to compensate for the difference between the value of the business as warranted and its actual value, whereas an indemnity may operate as a pound-for-pound recovery mechanism.
The precise drafting, causation requirements and exclusions must be reviewed carefully.
What is the role of the disclosure letter?
A disclosure letter qualifies warranties by identifying exceptions to them. A seller may defend a warranty claim by showing that the relevant matter was fairly disclosed in accordance with the agreement.
Disputes commonly concern whether disclosure was sufficiently clear and specific, whether merely providing documents was enough, and whether the buyer already knew about the issue. The purchase agreement and disclosure bundle should be reviewed together.
Can a buyer claim for misrepresentation?
A misrepresentation claim may arise where a false statement of fact induced the buyer to enter the transaction. Potential remedies can include damages and, in appropriate cases, rescission, which seeks to unwind the contract.
Sale agreements often contain entire agreement, non-reliance and limitation clauses. Their wording and legal effect require careful analysis, particularly where fraud is alleged.
What causes earn-out disputes?
Earn-outs link part of the price to future performance. Disputes may concern accounting policies, management decisions, allocation of costs, revenue recognition or whether the buyer operated the business in a way that depressed the earn-out.
The agreement’s calculation mechanism, conduct obligations and expert determination provisions are central. Accounting expert evidence may be required.
What evidence is important?
- The signed purchase agreement and ancillary documents
- Disclosure letter and disclosure bundle
- Heads of terms and relevant negotiations
- Due diligence requests and responses
- Completion accounts and management accounts
- Board papers, forecasts and communications
- Evidence supporting the alleged loss
Documents should be preserved immediately, including electronic communications and deal-room materials.
How quickly must a claim be notified?
The agreement may impose a shorter contractual deadline than the general statutory limitation period. A notice may need to identify the nature of the claim and provide reasonable detail or an estimate of loss. Defective or late notice can defeat an otherwise valid claim, so advice should be taken without delay.
Can these disputes be resolved privately?
Yes. Negotiation and mediation are commonly used, particularly where the parties have continuing obligations or reputational concerns. Completion account and valuation disputes may be referred to expert determination if the contract provides for it.
Arbitration may apply where the transaction documents contain an arbitration clause. Otherwise, court proceedings may be required.
What compensation may be recovered?
Recovery depends on the cause of action, contractual drafting and evidence of loss. Potential remedies may include damages, payment under an indemnity, debt recovery, declarations, specific performance or rescission. Contractual caps, baskets, de minimis provisions and mitigation issues may reduce recovery.
Why choose Preston Redman?
Preston Redman combines commercial litigation experience with corporate and transactional knowledge. This allows us to examine the deal documents in context and give direct advice on merits, evidence, value and strategy.
We act for buyers and sellers and focus on resolving disputes proportionately, while taking robust action where the commercial position demands it. Contact us today.
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