A SURVEY OF DELAWARE CASE LAW ON POST-CLOSING CLAIMS FOR BREACHES OF REPRESENTATIONS AND WARRANTIES IN PRIVATE-TARGET M&A TRANSACTIONS

This article offers a survey of Delaware case law on the primary sources of post-closing liability for breaches of representations and warranties in private-target M&A transactions. The authors first review the key risks faced by sellers, including fraud claims, extra-contractual representations and warranties, and damages calculated using a transaction multiple. They then discuss practical strategies for sellers in addressing these and other risks and for buyers in leveraging their advantages. In particular, the authors discuss recent Delaware case law affecting indemnification claims, including opinions on the validity of claim notices and provisions relating to fee-shifting and advancement of attorneys’ fees. The article also discusses the role of representation and warranty insurance, and concludes with practical takeaways for sellers and buyers.