LegalDeal Structure
The Clawback Machine
Also known as: Indemnity clawback, post-close price reduction, rep-breach deduction machine
TO-original framework. Dollar-one baskets, long survival periods, broad indemnity scopes, and offset rights turn the indemnity clause into a mechanism for reducing the purchase price after closing.
WHY IT MATTERS
Introduced in D.10 (The Fine Print That Costs Millions). Indemnity isn't just about who's liable. It's about how easily the buyer converts a claim into a deduction. Three features make the Clawback Machine work: dollar-one baskets that eliminate friction from filing claims, long survival periods that extend the buyer's window to find breaches, and offset rights that let the buyer deduct claims directly from seller notes and earnout payments without independent review. Combined, these turn the indemnity clause into a tool for reducing the purchase price after the deal closes. The Crossfield deal had all three. RWI made it worse — with insurance backing claims, the buyer filed more aggressively.