Last updated Jun 14, 2026

Post-Exit Manage

An acquired entity is not the same as a dissolved entity. After a stock sale, the legal entity transfers to the acquirer but its obligations to former-stakeholders persist for 12–36 months. Matter calls this post-Exit Manage — a constrained-active state where a narrow allowlist of mutations is permitted on an entity that has signed away its operational future but still owes legal duties to its former officers, indemnitees, earnout recipients, and regulators.

The lifecycle's terminal state is dissolved. But the path to terminal isn't always linear. Stock-sale acquisitions transfer ownership of the legal entity to the acquirer years before that entity dissolves. Earnouts measure performance for two or three fiscal years post-close. Indemnity claim windows run for 12 to 24 months. The IRS can re-characterize parachute payments long after the wire has cleared. A foreign-formed reporting parent has BOI obligations that close only when the parent itself winds down.

This page documents the constrained-active state and names the resources Matter exposes for it. The endpoints in api/manage/earnouts, api/manage/indemnity, api/manage/filings, and the dissolution cascade in api/exit/dissolution honour the boundary. PRs that propose extending Matter into operational compute (running earnout cash flow, adjudicating indemnity claims, responding to IRS audits substantively) should be read against this page first.

What Matter does

Matter owns the corporate-governance and obligation-recordation surface around post-close obligations. Specifically:

Earnout windows

EarnOut (eo_*) tracks multi-period payouts negotiated at close. Matter records the obligation, computes formula evaluations against attested actuals, and tracks payouts. The structured fields:

• formula — today a free-form string capturing the closing-document language; a structured grammar is on the roadmap.
• measurement_periods[] — per-period start, end, target, actual (acquirer-attested), computed_payout, and evaluation_status.
• payout_schedule[] — per-payout due_date, amount, recipient, status: pending | wired | clawed_back.
• current_status: active | satisfied | extinguished — extinguished covers both target-met and target-missed terminal cases.

Matter records the obligation and the evaluations. Matter does not manage the actual cash flow of payouts — that's the acquirer's accounts payable system — and Matter does not compute actuals from raw operational data — that's the acquirer's accounting team.

Indemnity claim windows

IndemnificationAgreement (ind_*) carries the original carve-outs from close. Post-close, three resources surface activity inside the window:

• IndemnityClaim (ic_*) records each claim raised by the buyer. kind: alleged_rep_breach | tax_liability | environmental | other. status: open | resolved.
• The resolution path is one of settled_via_escrow_draw, settled_via_carve_out_release, settled_via_payment, denied, or withdrawn. Each resolution writes a Document.
• Each carve-out release records as Document.kind: indemnity_carve_out_release, attached to the original IndemnificationAgreement via attaches_to + attachment_kind.

Carve-outs in ind_*.carve_outs[] are mutable post-execution via release agreements — the only governance path that mutates a signed indemnification agreement post-close.

280G audit windows

When the IRS re-characterizes parachute payments at close, the legacy entity carries the response burden. Resources:

• Filing.type: irs_audit_response_4470 (proposed) — the formal response document the entity files.
• Resolution.kind: 280g_recharacterization_acknowledgement — the board's recordation of the recharacterization and the resulting adjustments.
• Each affected officer receives a Document.kind: 280g_excise_tax_assessment capturing the re-characterized amount, the 20% excise tax, and the gross-up entitlement (if any) flowing from the original close documents.

This is distinct from the at-close 280G analysis (the shareholder-vote and disqualified-person analysis that runs before close). The at-close treatment lives in its own convention page; this section covers the post-close audit-response flow only.

BOI close-out for foreign reporting parents

FinCEN's March 26, 2025 final rule narrowed BOI reporting to foreign-formed companies registered to do business in the United States. A foreign-formed parent (e.g., a UK Ltd holding a US C-Corp) is still a reporting company. Domestic-only structures fall outside the regime.

For foreign reporting parents, BOI does not close at the M&A close — it closes when the parent itself fully dissolves. Filing.type: boi_closure_foreign_reporting (proposed) closes the parent's BOI report. Matter cascades this when both the foreign parent and the US child wind down; if only the US child dissolves and the parent persists, the parent's BOI obligations carry forward.

What Matter does NOT do

These belong to the acquirer, counsel, the tax advisor, the foreign jurisdiction's tax filer, or the M&A advisor — not to Matter.

• Run earnout cash flow. Wiring payouts on the schedule, executing clawbacks, reconciling against operational accounts. Acquirer's AP system.
• Compute earnout actuals from raw data. Pulling revenue, ARR, bookings, gross margin, EBITDA from operational systems and rolling them up by measurement period. Acquirer's accounting team. Matter records the attested actuals; it does not derive them.
• Negotiate indemnity claim resolutions. The settlement vs. denial decision, the dollar amount of an escrow draw, the scope of a release. All counsel domain. Matter records the resolution Document and the corresponding IndemnityClaim.status flip.
• Respond to IRS audits substantively. The legal and tax substance of a 280G recharacterization response — the arguments, the supporting documentation, the taxpayer position — is counsel and tax-advisor work. Matter records the formal response Document and the board's acknowledgement Resolution.
• Manage the foreign parent's tax filings. UK Corporation Tax returns, Companies House confirmation statements, equivalent jurisdictional filings. Foreign jurisdiction tax filer's domain. Matter tracks the BOI close-out only.
• Replace the M&A advisor or escrow agent. Escrow administration, release-of-funds mechanics, advisor coordination — these are external_manual integrations on the CorporateTransaction, not Matter resources.

How handoff works

The pattern is the same in every direction: Matter records the authorisation; the partner runs the flow; the partner acknowledges back.

                   ┌─────────────────────────┐
                   │   Matter (governance)   │
                   │  - EarnOut record       │
                   │  - IndemnityClaim       │
                   │  - Resolution authoring │
                   │  - Filing (obligation)  │
                   └────────────┬────────────┘
                                │
       "attest period actual"   │   "settle claim"
       "file 4470 response"     │   "close foreign BOI"
                                ▼
                   ┌─────────────────────────┐
                   │  Partner (compute and   │
                   │   execute)              │
                   │  - Acquirer AP          │
                   │  - Counsel              │
                   │  - Tax advisor          │
                   │  - Foreign tax filer    │
                   └────────────┬────────────┘
                                │
                    Webhook acknowledgement
                                │
                                ▼
                   ┌─────────────────────────┐
                   │   Matter (governance)   │
                   │  - EarnOut.period →     │
                   │    settled              │
                   │  - IndemnityClaim →     │
                   │    resolved             │
                   │  - Filing.status →      │
                   │    accepted             │
                   │  - Window closure       │
                   └─────────────────────────┘

The constrained-active state holds while any of the four windows are open. As each window closes, Compliance removes the corresponding obligation. When the last window closes, the entity is eligible for the standard dissolve flow.

The constrained-active state

While post-Exit obligations are open:

• The entity remains in active. The originating CorporateTransaction (ctx_*) carries status: closed and references the M&A.
• The Compliance view continues to surface obligations — earnout measurement deadlines, indemnity claim windows, IRS audit response deadlines, BOI close-out triggers — alongside the entity's standard recurring obligations.
• The cap-table is frozen at close. No new grants. The only post-close cap-table-adjacent mutations are carve-out releases (which mutate ind_* not the ledger) and 280G recharacterization acknowledgements (which adjust officer compensation records, not share counts).
• Annual filings continue. Form 1120 for the US legacy entity, foreign-jurisdiction returns for the parent, BOI updates if the parent's beneficial owners change. The compliance calendar tracks these as it does for any active entity.

Transition to Exit

When the last open obligation closes — earnout extinguished (target met or terminal-missed), indemnity window expired with no open claims, IRS audit closed, BOI close-out filed where applicable — the entity becomes eligible for the standard dissolve flow.

The dissolve call in this case carries procedure: post_obligation_windows_closed (proposed variant, similar in shape to post_asset_sale_shortcut). The procedure attests to the closure of all four windows and short-circuits the wind-down branches that are not applicable to a stock-sale legacy entity (e.g., final payroll cycles, which already ran at close).

See /cookbook/dissolve-an-entity for the standard dissolution cascade and the post_obligation_windows_closed variant's allowed shortcut steps.

Why the boundary

Three reasons.

Source-of-truth ownership

Earnout actuals, indemnity claim resolutions, IRS audit responses are continuously updated by the acquirer, counsel, and the tax advisor. Matter mirrors them via webhook attestations rather than computing them. If Matter mirrored the underlying data, Matter would either be permanently stale or would force migration off the partner systems. Both are bad outcomes.

Separation of concerns

Matter is the corporate-governance ledger of the legacy entity. The acquirer's systems are the operational truth. The legacy entity's job post-close is governance — board acknowledgements, formal Document generation, compliance-calendar tracking. Earnout cash flow, claim adjudication, audit response substance live in systems built for those domains.

Legal protection

The constrained-active state is what makes officer and director indemnification durable post-close. Indemnification protections under DGCL §145 attach to officers and directors of the corporation as it existed; if Matter let the entity dissolve before obligations clear, indemnification protections evaporate at the moment they're most likely to be needed (a buyer-raised rep-breach claim, a 280G IRS notice). The constrained-active state preserves the corporation's legal continuity through the obligation windows.

Adding a post-Exit obligation window

When a new post-close obligation surface comes up (deferred consideration, working-capital true-ups, regulatory consent decrees, clawback under Dodd-Frank §954, etc.), the design pattern is:

1. Identify the corporate-authorisation moment. Is there a Resolution, a Document, an Authorization? The original close documents almost always create the obligation; Matter models the authorisation chain that links the obligation back to close.
2. Identify the recurring measurement. Earnout actuals, claim aging, audit deadlines, true-up periods? That's the partner; Matter records snapshots via attestations.
3. Identify the legal documents. Settlement agreements, release agreements, audit responses, true-up acknowledgements — Matter exposes Document.kind enum values with templates where the document content is shaped by law.
4. Identify the calendar obligations. Measurement deadlines, claim windows, audit response deadlines, true-up cutoffs — Matter writes these to Compliance.
5. Identify the closure event. When does the obligation extinguish? Window expiration, full payout, audit closure, parent dissolution. Matter models the closure event so the constrained-active state knows when the window can be removed from the eligibility check for dissolve.

If a proposal cannot be expressed in those five buckets without inventing a recurring-flow resource, it crosses the line. Either the proposal needs to be reshaped, or it belongs in the partner — not in Matter.

Related

• Lifecycle — the broader Create / Manage / Exit framing post-Exit Manage fits inside.
• Payroll and benefits handoff — the same boundary pattern around employment and benefits.
• Dissolve an entity — the standard dissolution cascade and the post_obligation_windows_closed procedure variant.