Due Diligence & Legal
Successor Liability Risk
The risk that a buyer inherits a target's pre-existing statutory, tax, labour, or environmental liabilities by operation of law, regardless of what the transaction documents say.
Buyer Example
Buyer acquiring a Panipat textile dyeing unit via slump sale specifically diligences pending pollution control board notices, since certain environmental and labour dues can attach to the successor business by statute even in an asset-only structure — buyer negotiates an uncapped specific indemnity for exactly this category rather than relying on the general warranty cap.