Wall Street Journal Online (03/12/12) Tess Stynes
Barrett Business Services has agreed to purchase approximately 2.5 million shares from the estate of William W. Sherertz, the company’s late chief executive, in a deal valued at about $59.7 million. Under the terms of the deal, Barrett Business will also purchase 500,000 shares from Nancy Sherertz. Barrett Business president and chief executive Michael Elich says the company thinks the stock repurchase will be accretive to shareholders.
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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