asset acquisitions - Jackson Walker LLP

assuming that it is unlikely that the supplier would extend similarly favorable terms to aseparated division of the seller, the buyer should negotiate for a resale of the material by theseller to the buyer. Although that two-step process may be the best that the buyer can do in thatsituation, it should be noted that such an arrangement may be thwarted by prohibitions againstresale in the contract between the supplier and the seller, or it may come undone as a result ofdisagreements between the seller and the supplier after the closing.Post-Closing Covenants Relating to Seller’s Employees. Most of the issues relating toemployment of seller’s employees after closing in respect to a divisional acquisition are identicalto those arising in respect of the sale of seller’s entire operations by way of an asset sale. Thebuyer is concerned with retaining key employees of the acquired business and with a variety ofissues relating to the renegotiation of labor contracts and the assumption of benefit plans andtranslation of benefits. The seller is concerned, among other things, with avoidance of severancecosts, the application of business-closing statutes and possibly multiemployer pension planwithdrawal liability. The negotiated resolution of those issues is generally reflected in thestatement of conditions of closing as well as in post-closing covenants.Additional employee issues are presented in the divisional acquisition context,particularly where the seller will continue one or more lines of business which have affinitieswith the division that is being sold. The seller often will require that the buyer agree not torecruit or hire any of the seller’s employees for a stated period of time, and the buyer wouldexpect similar protection. Post-closing covenants also may be used to define the terms underwhich seller and buyer may share the services of employees for a period of time, althoughcollateral agreements are often drafted to cover such arrangements.2415257v2Appendix D – Page 8