Whenever a business entity seeks to acquire a busines asset it is strongly advised to structure part of the transaction as installment payments or include a withholding amount (to be disbursed subject to cash flow and liability representations being accurate).
The offset provision is usually contained within the indemnity povision of the purchase and sale agreement, or there may be a separate provision for withholding and required conditions for satisfaction.
The practical reality is there are many reasons a seller may want to offload a business asset. The seller almost invariably will paint the busines asset with overly optimistic exaggerations and potential.
A well crafted indemnity and offset provision will shift the burden on the seller to disprove the purchaser’s offset claims are improper.
