Representation for buyers pursuing claims after a business acquisition goes wrong — fraud, breach of representations, and disputes over what you were sold.
Ninety days after closing, the numbers stopped adding up. Revenue that looked reliable in due diligence turned out to depend on a handful of customers already planning to leave. Inventory on the books wasn’t on the shelves. A liability nobody disclosed showed up as a demand letter. If any of this sounds familiar, you’re not alone — and you’re not without options. Buyers who move quickly after discovering a problem generally have far more leverage than buyers who wait.
Common patterns we see: inflated revenue figures presented during diligence, doctored or incomplete financial books, and liabilities — pending litigation, unpaid taxes, undisclosed leases — that surface only after the deal closes. California Civil Code §1709 and §1710 provide the basis for a fraud claim where a seller knowingly made a false representation of material fact that you reasonably relied on in deciding to buy. The key is documentation: what was represented, when, and what the actual condition of the business turned out to be.
Most purchase agreements include specific representations and warranties about the state of the business, backed by an indemnification clause and often an escrow holdback. If a representation turns out to be false, the indemnification provision — not a fraud claim — is often the fastest path to recovery. But these clauses come with strict notice deadlines, and many agreements cap the seller’s liability or set a minimum claim threshold (a “basket”) before indemnification kicks in. Missing a notice deadline can forfeit an otherwise valid claim, so timing matters as much as the underlying facts.
Many acquisitions close on an estimated purchase price subject to a post-closing true-up. Disputes arise when the seller’s closing-date numbers don’t match what a post-closing audit finds, or when the parties disagree on how the purchase agreement’s adjustment formula should be applied. These disputes are often resolved through the agreement’s own dispute-resolution mechanism, such as a neutral accountant, before litigation is necessary.
Buyers who financed the purchase through an SBA loan face an added layer of exposure: misrepresentations that affect the business’s viability can also implicate the lender’s underwriting, and loan covenants may limit what a buyer can do while a dispute is pending. We coordinate the legal claim against the seller with an eye toward the buyer’s loan obligations, so pursuing a remedy against the seller doesn’t inadvertently create a separate problem with the lender.
Earnout provisions cut both ways. If a seller is challenging how you calculated an earnout payment as the buyer now operating the business, we represent buyers in that position too — defending the calculation methodology used, and addressing claims that ordinary post-acquisition business decisions somehow suppressed the earnout.
A clear path from first call to resolution.
Consult
A free consult where we talk through what happened and what documentation you have.
Agreement Review
We review the purchase agreement’s representations, indemnification terms, and deadlines.
Demand
A formal demand is sent to the seller outlining the claim and requested remedy.
Litigation or Arbitration
If the demand doesn’t resolve it, we proceed in the forum the purchase agreement specifies.
Flat-Fee Assessment
Purchase Agreement Dispute Assessment
$2,500 flat
We review your purchase agreement, closing documents, and the facts of what went wrong, then tell you what claims are available and what they’re likely worth pursuing.
It depends on the purchase agreement’s notice deadlines and the applicable statute of limitations, which vary by claim type. Acting quickly after discovering a problem generally preserves the most options.
Many purchase agreements route disputes to arbitration rather than court. We handle the claim in whichever forum the agreement specifies.
Indemnification claims are often subject to a cap and a minimum threshold set in the purchase agreement. Fraud claims are generally not subject to those same contractual limits, which is one reason how a claim is framed matters.
No — that’s part of what we review during the agreement review step, including whether an escrow holdback is still available to draw against.
A full review of your purchase agreement and closing documents against the facts of your dispute, and a clear statement of what claims are available and what pursuing them would look like.
Selling a business and facing a dispute instead? See our seller-side page →