Identified undisclosed litigation exposure before acquisition
5/19/2025
Client: Confidential Investor
Pre deal diligence surfaced pending arbitration and a regulatory inquiry that were not disclosed in seller materials.
Objective
Surface material legal, operational, and reputational risks before signing so the client could price accurately and negotiate protections.
Approach
- Mapped corporate structure and subsidiaries using filings, registries, and licenses.
- Searched litigation, arbitration, and administrative dockets across relevant jurisdictions.
- Reviewed consumer complaints, product safety databases, and adverse media.
- Interviewed former counterparties and vendors with consent to validate patterns.
- Built a chronology of events and matched to disclosures and board minutes.
Outcome / Impact
- Located active arbitration and a parallel regulatory inquiry not listed in the data room.
- Client negotiated a valuation adjustment and specific indemnities tied to the issues.
- Signing proceeded with tighter reps and warranties and a clear remediation plan.
Services used
They found what the process missed and gave us the leverage to fix it before it became our problem.
Background
The client was preparing to sign a purchase agreement on a compressed timeline. Initial disclosures were clean, but several hints suggested unresolved disputes.
What we did
We ran docket searches across state, federal, and administrative venues, then matched names against known subsidiaries and trade names. We analyzed safety and complaint databases to spot clusters and validated timelines with vendor interviews. We reconciled findings with the disclosure schedule and board materials.
Result
The client adjusted price and added targeted indemnities and conditions to close. The issues were addressed before signing, and the integration plan accounted for remediation.