Post-closing dispute
A post-closing dispute is a disagreement that arises after a business sale has completed, commonly over a working capital true-up, an indemnity claim for breach of a representation, or an escrow release, resolved through whatever mechanism the purchase agreement specifies, from direct negotiation to arbitration or litigation. Most are contained by the agreement’s own terms rather than ending up in court.
Signing and closing feel like the end of a deal, but the purchase agreement usually keeps working in the background for months or years afterward, through surviving representations, an indemnity, an escrow fund waiting to be released. A post-closing dispute is simply one of those mechanisms being triggered, and how contentious it gets usually depends on how clearly the agreement addressed the scenario in advance.
What post-closing disputes are usually about
- Whether a working capital true-up was calculated correctly
- Whether a representation was breached, and how much the resulting loss actually is
- Whether a claim was made in time to fall within the survival period
- Whether escrowed funds should be released or remain held pending resolution
Why the resolution mechanism matters more than people expect
Well-drafted purchase agreements specify how a dispute gets resolved, such as a named accounting firm for true-up disagreements, mandatory negotiation before arbitration, or a specific venue for litigation, precisely so the parties are not negotiating process from scratch while they are also disputing substance. An agreement silent on mechanism turns every disagreement into a bigger fight than it needed to be.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryIndemnity Baskets and Caps in an Ontario Business Sale
- 02Treadstone LawLegal commentaryHow Long Do Representations and Warranties Survive After an Ontario Business Sale?
- 03Treadstone LawLegal commentaryEscrow and Holdbacks in an Ontario Business Sale
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