Scale-Up Feasibility Review Uncovers Undisclosed Risk in a Nanotech Acquisition
The buyer of a nanomaterials startup sought to rescind a portion of the purchase price after discovering, post-closing, that the company's proprietary graphene production process, represented during diligence as ready for industrial-scale manufacturing, in fact suffered from a yield collapse at production volumes beyond laboratory scale, in a dispute over the purchase price. The buyer retained a nanotechnology expert with graphene synthesis and process scale-up experience to review internal process development records, pilot-scale trial data, and the specific scale-up milestones represented in diligence. The expert found internal pilot-scale trial reports had documented a significant yield decline at intermediate production volumes more than eight months before closing, data not included among the diligence materials. That finding supported the buyer's misrepresentation claim and contributed to a negotiated purchase price adjustment.