Can Your Buyer Walk Away After You’ve Signed the Acquisition Agreement?

You finally have a buyer.

The acquisition agreement is signed. Your team has spent months negotiating the price, reviewing documents, answering diligence questions, and preparing for closing. At this point, it is easy to start thinking about the wire transfer.

Then the buyer’s diligence team finds something unexpected.

A loan does not match your disclosures. A side agreement was never properly documented. A financial statement contains information that was not disclosed. Suddenly, the transaction you thought was finished is back under scrutiny.

That distinction matters because signing an acquisition agreement does not always mean the deal has closed.

A recent example involving VideoVerse shows how serious the gap between signing and closing can become. In September 2025, BlackRock backed Minute Media agreed to acquire VideoVerse for a reported $250 million. By April 2026, VideoVerse co-founder and CEO Vinayak Shrivastav had been removed from the company. The following month, Minute Media terminated the transaction, citing “significant discrepancies” in VideoVerse’s representations.

Lawsuits pending in Delaware Chancery Court allege forged signatures on loan and merger documents and fabricated bank statements. Lender Lingotto says it wired $53 million of a $55 million loan in October 2025 and did not receive a $4 million payment due the following March. Another creditor is pursuing a $64 million claim, while investor Bluestone Capital has filed a separate fraud lawsuit.

The facts of that dispute are allegations being litigated. But the broader lesson for founders is clear: the period between signing and closing still matters.

Signing Is Not Closing

A signed purchase agreement is not necessarily the finish line.

Most acquisition agreements contain closing conditions. They may also give the buyer rights if the seller’s representations prove inaccurate, if a material adverse change occurs, or if other agreed conditions are not satisfied.

That means the buyer may have options to delay closing, terminate the agreement, seek damages, or pursue other contractual remedies depending on the agreement.

The period between signing and closing is therefore not a period when founders can stop paying attention to the company’s records.

This is often when the buyer conducts additional diligence, confirms representations, and verifies financial and legal information.

If previously undisclosed debt, questionable documents, or material inconsistencies appear during that process, the buyer may reconsider whether it wants to close.

Reps and Warranties Are Not Boilerplate

Representations and warranties are among the most important provisions in an acquisition agreement.

They are the seller’s contractual statements about the company.

A buyer may require representations covering:

• The accuracy of the company’s financial statements
• All loans, liens, creditors, and other financial obligations
• The company’s authority to enter into the transaction
• Undisclosed litigation and side agreements

These statements are not simply language added to complete the agreement.

If a representation turns out to be false, the consequences can be serious. Depending on the agreement and the facts, the buyer may have a right to terminate, reduce the purchase price, seek indemnification, or pursue claims against responsible parties.

A mistake does not necessarily become fraud. But an inaccurate representation can still create a contractual problem even when the founder did not intend to mislead the buyer.

That is why your counsel should test the representations against the company’s actual records before you sign.

Deal Structure Determines Where Liabilities Go

The structure of the acquisition also matters.

In a stock sale, the buyer purchases the company’s shares. The legal entity continues to hold its assets and liabilities. That means the buyer generally takes the company with its debts and other obligations.

In an asset sale, the buyer purchases specified assets and assumes the liabilities it agrees to take on. Other liabilities generally remain with the seller’s entity.

This distinction can affect how a buyer responds when it finds financial records that cannot be verified.

If the buyer believes there may be unknown liabilities, it may push for an asset transaction so that it can limit the liabilities it assumes.

In some cases, serious uncertainty may contribute to the buyer walking away altogether.

Founders should therefore understand the proposed transaction structure before signing an LOI or acquisition agreement. It is not merely a drafting preference. It affects risk allocation after closing.

Your Paper Trail Can Protect You

A clean corporate record is one of the best defenses against unnecessary confusion during diligence.

Secondary stock sales, side letters, loans, and other arrangements should have the appropriate approvals and documentation.

Consider a side letter that was signed without board authorization. Even if the arrangement itself was legitimate, the missing corporate formalities can raise questions when a buyer reviews the file years later.

The same applies to financial obligations.

If your company has taken on a loan, opened a credit line, granted a lien, or entered into another financial arrangement, the records should reflect it accurately.

Your goal is not to create paperwork for its own sake. Your records should allow a buyer to understand what happened without having to reconstruct your company’s history.

Prepare for Diligence Before the Buyer Does

Do not wait for the buyer’s diligence team to identify problems.

Maintain a current, board-reviewed record of loans, liens, side agreements, and other material obligations. Keep the supporting documents organized.

Then have counsel review the representations and warranties against your actual financial records before you sign.

For example, if the agreement says there are no undisclosed creditors, confirm that statement against your accounting records, loan documents, board materials, and other relevant files.

The same process should apply to litigation, corporate authority, material contracts, and side arrangements.

Running your own diligence review first gives you an opportunity to correct records, make disclosures, and address issues while you still control the process.

Common Founder Mistakes

• Treating a signed acquisition agreement as the finish line. Signing the agreement does not necessarily mean closing is guaranteed. Founders may relax once the documents are signed and then get surprised when diligence continues. Closing conditions still have to be satisfied.
• Allowing financial disclosures to become outdated. A credit line or other financial obligation may seem minor when it first arises. Years later, failing to disclose it properly can make the buyer question whether information was deliberately withheld.
• Accepting the buyer’s preferred deal structure without legal analysis. Founders sometimes let the buyer’s first draft determine whether the transaction will be a stock sale or an asset sale. That can leave the founder without a clear view of how liabilities and post-closing exposure will be allocated.

10-Minute MAC Clause Self-Check

• Have you disclosed every loan, credit line, and creditor to your board?
• Can you provide audited financial statements covering the most recent 24 months?
• Do you understand whether your transaction is an asset sale or stock sale and the reason for that structure?
• Has every side letter received the required board authorization?
• Do the documents in your data room match the information you have given the buyer verbally?

If you cannot answer yes to all five questions, you may not be ready to sign yet.

Bottom Line

A signature does not necessarily end an acquisition.

It starts the period when the buyer tests the statements you made about the company.

Your financial records, corporate approvals, contracts, liabilities, and side agreements all need to stand up to review.

Founders who prepare their own diligence before the buyer begins have a much clearer view of the risks. They can address problems while they still have control over the process instead of trying to explain them under closing pressure.

Ready to Build a Company a Buyer Can Actually Trust?

Join our upcoming Product Launch Master Class on September 29th, 2026. You will learn how to identify legal risks before launch, understand which agreements and policies your business may need, and prepare your company for customers, investors, and future growth.

Register now: https://primumlaw.com/product-launch-master-class/