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Corporate Development Associates v. Roberts Pharmaceutical Corporation

A-3807-97T3 (N.J. Super. App. Div. 1999) (Unpublished)

BROKERS; COMMISSIONS—A brokerage commission payable on the sales price of a subsidiary is not payable on the value of accounts receivable distributed, contemporaneously, to the company’s parent.

A broker was in the “business of locating space ... parties for mergers, acquisitions and divestures.” It was engaged by a customer to locate a buyer for the customer’s corporate subsidiary. If it located such a buyer, it would be paid five percent of the consideration paid by the buyer of that subsidiary. It found a buyer and the transaction was structured for the payment of a sum of money for the subsidiary’s stock. In conjunction with the transaction, the subsidiary transferred its accounts receivable to its parent company as a dividend. It then sought to pay the brokerage commission based on the purchase price, but the broker asserted that it was also entitled to a commission on the value of the receivables. The lower court ruled against the broker and the Appellate Division affirmed based upon a finding that the full cash consideration paid for the stock, from the independent buyer, was the only basis upon which the commission should be paid.


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