Wall Street Journal (10/26/12) Jeffrey Sparshott; Eric Morath
U.S. economic growth improved in the third quarter as consumers and the federal government spent more and the housing sector picked up. GDP in the second quarter of 2012 was initially estimated at 1.5%, revised up to 1.7%, and then revised down to 1.3%. The slow pace of growth has contributed to high unemployment. So far this year, employment growth has averaged 146,000 jobs per month, a decline from 153,000 last year.
Buyers of a business generally expect sellers to be responsible for certain liabilities relating to when the seller owned its business—a concept mergers and acquisitions professionals refer to as indemnification. Indemnification is one of the most heavily negotiated, and potentially most significant, provisions of a purchase agreement, and understanding the terminology common to such agreements is essential when negotiating a deal. Attorney Paul Pincus of Ortoli Rosenstadt LLP explains what sellers are liable for, how a seller’s liability may be limited, and how buyers may seek to fund potential indemnity claims.
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