It is not uncommon for parties to an otherwise smooth transaction to find themselves mired in disagreements post-closing. Disputes commonly arise related to adjustments to the purchase price, including working capital adjustments and earnout payments. In addition, buyers may allege post-closing that certain representations and warranties the seller made have been breached, resulting in alleged damages based on the buyer having received less than what it “bargained for.”
Accounting, financial, and valuation practitioners may be able to assist buyers and sellers in examining the issues arising in post-acquisition disputes, either as a consulting expert, expert witness, or neutral arbitrator. To assist practitioners, this chapter outlines the transaction process, types of post-closing adjustments to the purchase price, and various types and methods for quantifying damages, including a case study.