A business takeover is one of the most impactful transactions you can do as an entrepreneur. The purchase price is often substantial, expectations are high and the relationship between buyer and seller has to last for years to come due to earn-out arrangements, management agreements or non-compete clauses. What happens if those expectations do not materialise and the cooperation comes to a standstill? A recent ruling by the Gelderland District Court shows that a buyer who is subsequently dissatisfied with the acquisition cannot simply successfully rely on contractual guarantees, non-competition clauses or allegations of fraud. The court sharply assesses what the buyer knew beforehand, what agreements were made and whether the buyer himself raised the alarm in time. For any company considering buying or selling a business, this ruling contains valuable lessons.
The crux of the case
On 3 December 2025, the Gelderland District Court, sitting in Zutphen, gave judgment in an extensive dispute surrounding the acquisition of an insulation company. The buyer had acquired all shares in a private limited company in May 2023 for over €8.1 million. The transaction included a purchase agreement with extensive warranties, a non-compete clause, a confidentiality clause, a management agreement for the former director and a participation agreement.
After the acquisition, dissatisfaction arose with the buyer. Turnover fell short of expectations and the buyer discovered that the seller was involved in two other companies engaged in façade cleaning, façade renovation and solar panel installation. The buyer saw therein competing activities, breach of warranties and even fraud. Claims ran into millions of euros in damages and contractual penalties.
Competition clauses: scope is decisive
A central issue in dispute was whether the seller had breached the agreed non-competition clauses. The purchase agreement, management agreements and participation agreement each contained their own non-competition clauses. The buyer claimed that the seller carried out competitive activities through two other companies.
The court ruled otherwise. The purchase agreement explicitly stated that the acquired company was engaged in roof insulation, cavity wall insulation, floor insulation and soil insulation. The seller's two companies focused on facade cleaning, facade renovation, facade impregnation and solar panel installation. These are different activities. The court also attached value to the fact that the purchase agreement, as a private deed, provides compelling evidence of what it stipulates. The buyer had had the agreement drafted by her own lawyer, so it must have been clear to her that the activities of the acquired company were limited to insulation.
In addition, the buyer was aware of the existence of these companies even before the acquisition. The seller had even offered to take over one of those companies with it, but the buyer had no interest in doing so. After the acquisition, the buyer did not object to the activities of those companies for months. All this contributed to the opinion that there was no violation of the non-competition clauses.
Warranty clauses: buyer's knowledge plays a decisive role
The buyer also invoked a breach of the warranty provisions in the purchase agreement. Those provisions included that the seller had not provided incorrect or misleading information and that all relevant information had been shared during due diligence.
The court put first that the buyer had confirmed in the purchase agreement itself that she had been provided with all desired books and records for inspection. Moreover, the agreement provided that there was no breach of warranties if the facts or circumstances were or could have been known to the buyer based on the due diligence information provided. The buyer was aware of the other companies and had not communicated with the seller in a timely manner. Under the purchase agreement, the buyer could be expected to consult with the seller in the event of suspected liability. The buyer's failure to do so for months meant that, in the court's view, she could no longer reasonably invoke the warranty provisions.
Fraud and tort: high threshold, insufficient substantiation
In addition to breach of contract, the buyer based its claims on fraud and tort. The buyer claimed that the financial statements had been polished, that there was subsidy fraud, tax fraud and NOW fraud, and that the seller had withheld corporate opportunities from the acquired company.
The court rejected all these contentions. Fraud under the law requires a person to deliberately induce another person to perform a legal act by false statements, concealment or artifice. The buyer failed to prove this. On the financial statements, the court ruled that the buyer's adviser was aware of the relevant credits before entering into the purchase agreement and that they had been set off in the transaction. The alleged fraud with subsidies, taxes and the NOW scheme was also not proven after being disputed by the seller.
The claim of tort by withholding corporate opportunities was also stranded. The court referred to established case law from which it follows that the withholding of corporate opportunities only occurs if activities are performed that belong to the domain of the company. Since the acquired company was engaged in insulation and the other companies were not, there was nothing to withhold.
The management agreement: termination is not always possible
A remarkable part of the judgment concerns the management agreement. The buyer had tried to terminate this agreement with the former director with immediate effect. The court ruled that the buyer did not have the right to do so. There was no breach of contract by the manager and no pressing reason or reasonable ground for termination was present. The management agreement continued until May 2026 and the buyer was ordered to continue paying the management fee for the remaining term. The court did not find it credible that the manager's performance was inadequate, as shortly before the termination his remuneration had been increased and he had been informed that there was "full confidence" in the cooperation.
What does this mean for your business?
This ruling underlines the importance of due diligence in business acquisitions, both for buyers and sellers. For buyers, due diligence is not just a formality. What you know or could have known as a buyer can be held against you later. Contractual warranties offer protection, but that protection will lapse if you yourself fail to act in time when you have suspicions of irregularities. In the purchase agreement, describe as precisely as possible what activities comprise the acquired company and what exactly is covered by the non-compete clause.
The lesson for sellers is that clear communication and transparency before the acquisition can prevent many problems afterwards. Record what information you shared and make sure the scope of non-competition clauses matches the actual activities.
It is wise to have a specialised lawyer review the contractual clauses in every acquisition. Consider not only the purchase agreement, but also ancillary agreements such as management agreements, participation agreements and confidentiality agreements. If you suspect a breach, be sure to consult with the other party immediately and in writing so that you do not lose your rights. And record every agreement, even if it is reached verbally.
Contact us
Are you facing a company takeover, have a dispute about warranties or non-compete clauses, or want your contractual position assessed? TK's Corporate & Commercial Litigation team will be happy to help you. With sound knowledge of contract law, dispute resolution and post-acquisition liability proceedings, our lawyers are ready to advise and assist you. Please feel free to contact Michiel Teekens.
