By Craig Godshall (June 26, 2017, 4:58 PM EDT) -- The recent Delaware case of Davis v. EMSI Holding Co. reminds us that basic Delaware law can defeat even the most well-crafted indemnification arrangements in a private company stock acquisition. The purchaser may have negotiated broad representations and covenants backed by strong indemnification provisions with aggressive baskets, caps, definition of damages, and all of the other bells and whistles that a purchaser looks for to protect its interests. The parties may have fully documented an agreed-upon allocation of risk. Yet, if the sellers or the sellers' representatives are directors and officers of the target company, all that planning and drafting may be for naught. Under Delaware law, preclosing directors and officers very well may be entitled to indemnification for claims made by the purchaser under the acquisition agreement, including advancement of costs for defending the purchaser's claims. In effect, a company owned by the purchaser may have to pay the seller's legal fees, and perhaps even pay their damages, if the sellers are found liable for a claim....