As we have written about in the past, earnout provisions in M&A agreements are often ways to find value and bridge a buyer’s and seller’s differing expectations of the future.  But they also are ripe for litigation, especially if the buyer changes the way the business is run or pursues other opportunities that may affect the earnout.  Such disputes are highly fact-specific and often turn on the unique issues facing the acquired business.  A recent case from the Delaware Court of Chancery illustrates an example of a buyer not having to pay an earnout when its conduct to not enter into new business with a potential customer was influenced by a simultaneous transaction to sell an equity stake in the buyer.

(more…)