By Sara Duran and Sacha Jamal, Sidley Austin LLP ( April 27, 2017, 12:04 PM EDT) -- Private equity firms selling portfolio companies engage in thoughtful — and sometimes contentious — negotiations to limit their post-closing liabilities. PE firms attempt to do this by employing one or more of the following: (1) making a holding company be the "seller," (2) having the holding company provide the substantive representations and warranties, (3) contractually setting a cap on liability, (4) requiring the buyer to disclaim reliance on extracontractual representations (whether or not made fraudulently), and (5) attempting to limit liability against third parties (such as employees of the PE fund or advisory company). But despite these and other protections, a seller's post-closing liability can be unknown and, more troubling, the PE firm can have direct liability. We look at one example — fraud-in-the-inducement claims — through the lens of the Delaware Superior Court's recent decision in ITW Global Investments Inc. v. American Industrial Partners Capital Fund IV LP, C.A. No. N14C-10-236 (Del. Super. Ct. March 6, 2017).[1]...