It is not uncommon for parties to an otherwise smooth merger-and-acquisition (M&A) transaction to find themselves mired in disputes post-closing. M&A disputes commonly arise related to post-closing adjustments to the purchase price, including working capital adjustments and earnout payments. In addition, buyers may allege post-closing that the seller breached certain representations and warranties, resulting in alleged damages based on the buyer having received less than what it “bargained for.”
Working closely with legal counsel, 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 post-acquisition transaction process, types of post-closing adjustments to the purchase price, and various types and methods for quantifying damages, including a case study.