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by Bob Abdo

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I’m selling my business and the business broker tells me I will continue to have liability for the business after I close. Is this true?

All matters in a Purchase Agreement to buy or sell a business are negotiable. However, there are certain matters which are normal and have various resolutions. Continuation of liability for some obligations is one. 

A Buyer will want to have a remedy in the event the truth of representations and warranties that it relied upon in determining whether or not to buy turns out to be false. That is, it will want the Seller to remain liable. Some of these representations relate to financial statements, payment of taxes, environmental, customer lists, equipment and inventory, employees, real estate, working capital, authority, litigation, material contracts, title to assets and so forth.

There may also be some post-closing agreements that Seller must do or stand behind. These include introduction to, and transition of customers and suppliers, non-competition agreements, product warranties, and the like.

What to do? Negotiations should try to limit the exposure to these liabilities and obligations. This limitation can include

•        establishing a dollar threshold that must be exceeded before Seller has liability,

•        limiting the length of time that the representations and warranties or agreements survive,

•        placing a dollar ceiling on the total and individual matter liability,

•        excluding certain damages, and

•        agreeing on reasonable procedures to determine ultimate liability.

For more information about negotiating the sale or purchase of a business, contact Lommen Abdo Attorney Bob Abdo at rabdo@lommen.com or 612-336-9334. 

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Bob Abdo

Bob Abdo

Bob Abdo represents entities and individuals involved in a variety of private and public businesses from entity formation, through organic and acquisition growth, financing and challenges, to sale or merger. He has provided counsel to profit and non-profit boards of various kinds for both business and community. Bob served both on the city council and six terms as Mayor of the City of Minnetonka Beach, and as President of both the Minneapolis Athletic Club and the Lafayette Club. He has been repeatedly included on the Minnesota Super Lawyers list in the categories of Small & Privately Held Business Law and General Business and is among the Best Lawyers in America®. He is rated AV® Preeminent™ 5.0 out of 5 in by Martindale-Hubbell.

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Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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