Right of setoff

Hi guys,


Would anyone be able to shed some light on the right of setoff/offset in the context of M&A please?

My understanding is that it is a remedy in case of seller being in breach of reps/warranties, buyer can claim directly against the security (escrow or else) without having to go to court to settle the score. Is that correct?

What is seller doesn't agree? 

It seems to be one direction only...

Thanks 

 
Most Helpful

Not quite how I’ve seen it in practice. I’ve mostly seen a set off in the context of future payments. Let’s say you owe an earn out, but have an indemnity claim. The set off would allow you to holdback the claimed amount from the earnout while the claim is pending. The set off itself doesn’t settle any matters - how disputes are handled (arbitration or court) are separate from the ability to hold back additional payments while the dispute is pending.

Buyers like them because it can essentially turn an earnout into an escrow.

 

Officiis qui sit laborum. Qui nulla inventore possimus praesentium. Voluptas voluptatem quia non corporis ex sequi. Non repellendus et unde deserunt quasi id dolore quia. Consequatur unde dolore aut consequatur et tempora nam.

Career Advancement Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Warburg Pincus 99.0%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

March 2024 Private Equity

  • Principal (9) $653
  • Director/MD (21) $586
  • Vice President (92) $362
  • 3rd+ Year Associate (89) $280
  • 2nd Year Associate (204) $268
  • 1st Year Associate (386) $229
  • 3rd+ Year Analyst (28) $157
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (313) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”