MarketWatch (11/17/13) Jeffry Bartash
The U.S. economy is plodding along, and economic forecasts don’t give much reason for optimism. “It looks like we are going to see a softer fourth quarter,” says Sam Bullard, an economist at Wells Fargo. “Underlying domestic demand is running in place, confidence is still depressed historically speaking, and the unemployment [rate] remains above 7%. That’s producing a cautious consumer.”
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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