What happens if the seller undervalued outstanding warranty claims from before I bought the business?

If the seller understated the scope of pre-sale customer warranty claims — an existing liability most purchase agreements require sellers to disclose accurately — discovering the true extent after closing generally supports an indemnity claim for breach of that representation, subject to whatever survival period, cap, and basket apply to it under your specific agreement.

Deal structure matters here too. In a share sale, historical warranty obligations generally travel with the corporation regardless of the representation problem, which is exactly why the indemnity claim — recovering the shortfall directly from the seller rather than simply absorbing the corporation's own liability — is your main practical protection. In an asset sale, whether you assumed responsibility for warranty obligations tied to pre-closing sales at all depends entirely on what the purchase agreement specifically assigned to you versus left with the seller. Quantifying the actual gap between what was represented and what's now emerging is the key evidence for valuing a claim like this, so start gathering that documentation early.