Takeover disputes

What we do

An acquisition is a dynamic and multifaceted process. Often, an acquisition process begins with discussions between the parties involved to exchange ideas. During this process, various interests are identified. The negotiation process often involves several phases, during which mutual commitment gradually strengthens. The negotiation process includes various common interim agreements, such as a confidentiality agreement, a letter of intent, and an outline agreement.

If a conflict arises during negotiations or if negotiations are unlawfully terminated, legal proceedings may be initiated. Our legal experts and lawyers provide support in this regard. Naturally, we also represent organizations in court or before an alternative dispute resolution body.

We have the knowledge and expertise to assume diverse roles: from advisory services to dispute resolution. We have an experienced team of lawyers and legal experts in the field of M&A disputes. Contact us to discuss the possibilities.

What is a takeover dispute?

An acquisition dispute is a conflict that arises surrounding the purchase or sale of a company or shares. Such a dispute can already be at play before the deal is finalized – for example, in the case of broken negotiations – but in practice, most conflicts arise after the acquisition, when the purchased company proves disappointing or the other party fails to adhere to the agreements. Within our Litigation / Disputes , we approach acquisition disputes from a litigation perspective: we focus on enforcing your rights, recovering damages, and conducting proceedings before a court, arbitrator, or binding advisor. Whether you are an international group or the baker on the corner who has sold his business – our mixed teams of lawyers and in-house counsel assist both buyer and seller.

Common takeover disputes

Although every deal is different, certain disputes recur time and again. The main types of M&A disputes we handle are:

• Breach of warranties. The seller guarantees in the sales contract that certain facts are correct (for example, the amount of debtors or the absence of outstanding claims). If a warranty proves to be incorrect, this constitutes a breach, and the buyer may claim damages or performance.
• Breach of indemnities. An indemnity covers a specific, foreseeable risk (such as a tax claim or an ongoing dispute). If that risk materializes, the seller is usually required to compensate the damages on a one-to-one basis.
• Earn-out disputes. In an earn-out, part of the purchase price depends on future results. Disputes arise regarding the calculation, whether the buyer has frustrated the results, or set-off against other claims.
• Error and non-conformity. The buyer feels misled about what he has purchased because essential information has been withheld or the company does not conform to the agreement.
• Violation of the non-compete clause. The seller resumes competing activities or takes personnel or customers with them, in violation of the agreed non-compete or non-solicitation clause.
• Broken-off negotiations. A party breaks off negotiations at an unauthorized time, while the other party was justifiably entitled to expect that the deal would be concluded.

Warranties and indemnities: the core of the dispute

Most acquisition disputes revolve around the warranties and indemnities in the purchase contract. The legal distinction is fundamental. A warranty is a statement by the seller regarding a general risk; if it proves incorrect, the buyer must prove that damage has occurred and the extent thereof. An indemnity relates to a specific, named risk and offers the buyer greater certainty: if the risk materializes, the seller is, in principle, fully liable. In the event of a breach of a warranty, we refer to this as a failure to perform, for which damages may be claimed pursuant to Article 6:74 of the Dutch Civil Code. We carefully assess which route—warranty, indemnity, error, or non-conformity—offers the strongest case in your situation.

Legal bases and remedies

Depending on the facts, various legal avenues are available. We combine them where possible and choose where necessary:

• Performance and compensation for damages in the event of a failure to perform warranties or indemnities (Article 6:74 of the Dutch Civil Code).
• Non-conformity arises when the delivered business does not conform to the agreement (Article 7:17 of the Dutch Civil Code). This conformity requirement applies not only to asset and liability transactions, but also to the purchase and delivery of shares.
• Annulment due to error if the agreement was concluded under the influence of a false representation of facts and would not have been concluded in that way had there been a correct representation (Article 6:228 of the Dutch Civil Code).
• Dissolution of the purchase agreement in the event of a sufficiently serious breach (Article 6:265 of the Dutch Civil Code).
• Termination of negotiations on the grounds of pre-contractual reasonableness and fairness, when termination is unacceptable in the given circumstances.

Please note: rescission and compensation for damages due to an incorrect warranty cannot always be combined. Rescission affects the warranty itself, which may cause a subsequent claim for damages based on that warranty to fail. Choosing the correct sequence and legal basis is therefore crucial – precisely what our litigation lawyers focus on.

The procedure: judge, arbitration or binding advice

How an acquisition dispute is settled depends on what has been agreed in the purchase contract and the importance of confidentiality. We conduct proceedings along three routes:

• The court. If the contract does not provide for its own dispute resolution mechanism, the ordinary court has jurisdiction. The proceedings are public, and the ruling provides clarity for all parties.
• Arbitration. Often agreed upon in major acquisitions. Arbitration is confidential – a major advantage regarding sensitive business information – and arbitral awards are enforceable worldwide.
• Binding advice. Often used for specific financial questions, such as determining an earn-out or adjusting the purchase price. This route is fast, informal, and relatively inexpensive.

We advise not only on the most promising legal basis but also on the most suitable procedural route, and assist you from the initial demand letter up to and including the hearing.

Why MKB Juristen in an acquisition dispute?

At MKB Juristen, lawyers and in-house counsel work together in mixed teams. This allows us to combine high-level litigation with practical business insight, at rates that are affordable even for smaller enterprises. We serve the full breadth of the market – from international corporations to the baker on the corner – and understand the practices of both buyers and sellers. In this way, we safeguard not only your legal position but also the commercial relationship where possible. A takeover dispute falls within our broader Litigation / Disputes.

Frequently asked questions about takeover disputes

What is the difference between a warranty and an indemnity?
A warranty is a statement regarding a general risk; in the event of a breach, the buyer must prove damages. An indemnity covers a specific, named risk and gives the buyer greater certainty: if that risk materializes, the seller is, in principle, fully liable.

Can I reverse a business acquisition?
Sometimes yes. In the event of error, the agreement can be annulled (Article 6:228 of the Dutch Civil Code), and in the event of a serious breach, it can be dissolved (Article 6:265 of the Dutch Civil Code). Whether that is feasible and sensible depends heavily on the facts.

Does non-conformity also apply to the purchase of shares?
Yes. The conformity requirement of Article 7:17 of the Dutch Civil Code applies not only to an asset-liability transaction, but also to the purchase and transfer of shares in an enterprise.

Who is handling my takeover dispute?
A mixed team of lawyers and in-house counsel from MKB Juristen, with experience in takeover disputes and litigation before the court, in arbitration, and in binding advice.