Post-acquisition dispute related to the calculation of working capital

CRA Forensic Services was retained by Sidley Austin to assist a major public company resolve a post-acquisition dispute related to the calculation of working capital in the closing balance sheet. Based on a review of authoritative GAAP guidance for future compensated absences, seller’s paid time off (PTO) policies, and employees’ historic PTO use patterns, A CRA consultant determined that the closing balance sheet’s accrual for PTO had been understated by almost $7 million. They also concluded that the accruals for sales and lease taxes had been understated. Our team’s independent analysis allowed our client (the buyer) to reach an equitable resolution with the seller and avoid having to escalate the issue to arbitration.