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What if profit was lower than what the seller said?

What if profit was lower than what the seller said?

What if profit was lower than what the seller said? 150 150 Jiang Hong Wilkin Business Law

When acquiring a company, the seller provides financial information, such as profit. Both parties agree to a selling price based on the financial information. What if the profit after closing is not as high as in the financial statement provided by the seller? There could be a price adjustment clause in the purchase agreement to protect the buyer. If the financial results after closing are worse than before, the selling price would be decreased, and the seller would refund the buyer. The better approach is to pay the price adjustment (a certain amount agreed by both parties) into escrow on closing, rather than waiting for seller to pay. When the price adjustment period is over, the balance will be paid to the seller. The seller may ask to adjust the selling price too. Should the buyer pay more if the financial results are better than before? All these should be negotiated before closing and addressed in the purchase agreement.

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