How the Tax Indemnity Trap Wipes Out M&A Sellers Gains

The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators · Jun 28, 2026 · 11m · transcript

Episode 79 of The Acquisition Talk digs into the tax indemnity trap — a clause that can force M&A sellers to cover the buyer's tax bill years after closing. Lucas and Luna walk through a real 2023 case: a $40 million software acquisition where a buried tax indemnity clause cost the seller $3.2 million in unexpected taxes and penalties after an IRS audit triggered by a pre-closing deduction structure. They explain how the trap works, why sellers often overlook it, and three concrete safeguards sellers can insist on in the purchase agreement. If you're thinking of selling your…