Legal Blog

M&A Nugget: Common Vendors

Suppose the purchaser and the target have a key supplier in common but the target is in financial straits and in arrears to the supplier.  A purchaser may need the supplier to continue to sell supplies to the target’s business after closing.  The vendor may insist on being paid the full amount owed in order to continue to sell supplies.  Should the seller pay the common supplier either shortly before closing or from the proceeds of the sale, preferring that common supplier over other creditors?  Depending on how severe the seller’s financial condition is, a payment to a preferred creditor could later be overturned.  The better practice in this scenario is for the purchaser to voluntarily pay the creditor after the closing, which should not be subject to attack.  In this way, the purchaser can ensure a steady flow of supplies from the key vendor.

 

 

If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.

 

ABOUT GLENN D. SOLOMON

gsolomon@offitkurman.com | 443-738-1522

Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.

 

 

 

 

  

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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