Common to highly successful, oftentimes leanly-run middle-market companies is that state sales and use tax compliance may not have kept up with growth of the business.  Almost inevitably, the due diligence process brings to the forefront the degree to which a company's operations have extended beyond past sales and use tax compliance practices.  Frequently, such extensions of operations may have created "nexus," or "significant physical presence" in states in which a company has not previously been collecting or reporting sales or use tax.

With hindsight being 20/20, it is always better for a seller to have developed a strategy and taken necessary remediation efforts prior to being in the throes of negotiating a sales transaction.  Such strategy or remediation efforts can include things such as obtaining resale or other exemption certificates as well as initiating "voluntary disclosure" processes in key states during or prior to the marketing process.

However, once a seller is waist-deep in the disposition process, it becomes of paramount importance in negotiating post-closing seller liability to have advisors on your side that understand the plane of sales and use tax exposure and are able to rebut, refine and reduce claims made by buyer's experts during the negotiation process.  With "nexus" being an ever-evolving dialogue among legislators, courts, departments of revenue, and taxpayers, the more your advisor keeps abreast of changes in the law, the more weapons you will have in your arsenal to limit your post-closing liability.