Chancery Court Clarifies Delaware’s Stance on Sandbagging and Transaction Multiple for Damages
At A Glance The Delaware Chancery Court has issued a notable opinion that confirms Delaware’s position as a pro-sandbagging jurisdiction and clarifies when damages may be computed using a transaction multiple. We examine the background and implications of the case in this Legal Update. The Delaware Chancery Court has issued a notable opinion that confirms […]
Frank J. Favia Jr. and Jonathan A. Dhanawade are Partners, and Andrew J. Stanger is a Knowledge Counsel, at Mayer Brown LLP. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
At A Glance
The Delaware Chancery Court has issued a notable opinion that confirms Delaware’s position as a pro-sandbagging jurisdiction and clarifies when damages may be computed using a transaction multiple. These are important points for parties to take into account when negotiating and drafting acquisition agreements.
In re Dura Medic Holdings, Inc. Consolidated Litigation [1] involved a private equity firm’s acquisition of a medical equipment supplier through a reverse triangular merger. As explained in more detail below, the buyer sought indemnification from the sellers for breaches of certain representations and warranties in the merger agreement.
