SNOW PHIPPS GROUP, LLC, and DECOPAC HOLDINGS INC., Plaintiffs-Counterclaim Defendants, v. KCAKE ACQUISITION, INC., KOHLBERG INVESTORS VIII-B, L.P., KOHLBERG INVESTORS VIII-C, L.P., KOHLBERG TE INVESTORS VIII, L.P., KOHLBERG TE INVESTORS VIII-B, L.P., KOHLBERG INVESTORS VIII, L.P., and KOHLBERG PARTNERS VIII, L.P., Defendants-Counterclaim Plaintiffs., 2021 Del. Ch. LEXIS 84

Summary

HOLDINGS: [1]-The buyers failed to show that an event had or was reasonably expected to have an effect sufficiently material and adverse to qualify as a material adverse effect (MAE) because the seller experienced a precipitous drop in sales but rebounded in the two weeks immediately prior to termination and was projected to continue recovering through the following year, and the seller was not projected to face a "sustained drop" in business performance; [2]-The MAE exception for effects arising from or related to changes in laws or orders by government entities applied because the vast majority of the decline in the seller's sales arose from, or at the very least were related to, COVID-19 related government orders, sales first fell at the precise moment that such orders were first issued, and the effects fell within one of the stock purchase agreement's enumerated carveouts.