Pros/Cons/Tips Buying Company Facing a Lawsuit

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher
in New Milford, CT, USA

1yr ago

Pros/Cons/Tips Buying Company Facing a Lawsuit

Looking for advice on purchasing a company that is facing a lawsuit. Specifically: (1) due diligence - what to look out for especially on balance sheet; (2) purchase price adjustment - how to estimate future risk and reflect that in purchase price/multiple; (3) escrow holdbacks - how much and indemnity provisions - types? (3) adverse judgement insurance - should the buyer or seller pay for this? who offers this type of insurance?

Or is this a "run don't walk" kind of scenario?

Thanks for any and all input

0 Likes

112 Views

reply by a searcher 1yr ago
from University of Virginia in Charlottesville, VA, USA

Beyond the actual legal ramifications, think about how the lawsuit could affect the business's reputation. This type of thing has the potential to destroy a business, or it may not be a big deal. Think about the worst likely outcome and hedge from there. Good luck!

reply by a searcher 1yr ago
from Northwestern University in St Paul, MN, USA

In today's litigious environment, I wouldn't necessarily run away from the deal, but I would definitely scrutinize it. As many others have commented, you'll need to really dig into the reason for the lawsuit. Was the lawsuit filed prior to the seller listing the company? Is the motivation to sell because of the lawsuit? This needs to be flushed out.