What to do next
Read the survival, notice and cap provisions first
Representations survive only for a stated period, claims usually require notice in a prescribed form, and recovery is often limited by a minimum threshold and a maximum cap. Missing the notice requirement can end a valid claim.
Identify which representation was breached
Financial statements, undisclosed liabilities, tax, employment matters, customer contracts, or compliance. Specificity determines the evidence and the measure of loss.
Check the escrow and earnout mechanics
Holdback or escrow funds are the practical source of recovery. Earnout disputes usually turn on how the target was calculated and whether the buyer operated the business in a way that affected it.
Notify insurers
Representation and warranty insurance, and D&O coverage, may respond. Notice provisions in policies are strict, so notify early even if the claim is not yet formulated.
Frequently asked questions
The financials were wrong — can I claim?
Likely, if it breaches a representation and you are within the survival and notice periods. Check those provisions before anything else.
What is a basket and cap?
A basket is a minimum threshold before you can claim; a cap is the maximum recoverable. Together they can make a real breach commercially unrecoverable.
Can the seller keep the escrow if I dispute?
Escrow release usually requires joint direction or a determination under the agreement's mechanism, which is often what forces resolution.
Is fraud different?
Yes. Fraud typically falls outside contractual caps and survival limits, which is why it is pleaded where the facts support it — but it is a high bar.
This is general information, not legal advice. Laws vary by location and every situation is different — speak with a qualified lawyer about your specific circumstances.