Page 29 - M & A Disputes

 Presenting positions to support testimony

Identification of Dispute Items

Practitioners may be engaged to perform an evaluation of the closing balance sheet as part of the post-
closing purchase price adjustment mechanism, identify areas that may not comply with the contractual
requirements for the preparation of the closing balance sheet, or assist in communicating a potential dis-
pute item to the counterparty in the transaction.

Discovery

Discovery is a step in the dispute resolution process whereby each party requests relevant information
and documents from one another in an effort to discover information relevant to the dispute. Forensic
accountants may be asked to assist buyers or sellers (and their respective legal counsel) to identify the
pertinent documents and financial records that should be requested from the opposing party during the
discovery process. Such documents and records are requested in order to substantiate or defend against
disputed items. Requesting the appropriate documentation during this phase can be important to success-
fully navigating the dispute resolution process. Often, the level of discovery afforded to the parties in
dispute is hotly contested.

Claims Analysis

If an M&A dispute ensues, practitioners may be asked to perform analyses regarding the claims set
forth. For instance, practitioners are often being asked to help assess whether a party’s specific claim
conforms to the contract and to perform research and analyses to substantiate a party’s position. As part
of such an analysis, practitioners may be asked to calculate the economic damages sustained and, if ap-
propriate, assess the impact of such damages on the purchase price. They may further be asked to per-
form an analysis to help inform a client about the likelihood of prevailing if a claim is pursued. Practi-
tioners may be asked to perform claims analysis as consulting experts or for purposes of testimony.

Presenting Positions to Support Testimony

In the event that a dispute cannot be resolved by the parties, practitioners may provide testimony at arbi-
tration or trial. Depending on the nature of the dispute, this testimony might address topics including,
but not limited to, the target’s adherence to GAAP; consistent practice; the calculation of postclosing
purchase price adjustments, such as working capital or contractual earnouts; and the measurement of
economic damages from alleged breaches of representations and warranties.

ADR Arbitration and Mediation

ADR may be used in M&A disputes as an alternative to litigation. ADR may be favored by parties as a
more cost-effective, timely, and private manner to resolve disputes. Two forms of ADR are arbitration
and mediation. Depending on whether arbitration or mediation is used, the parties will employ one or
more neutral third-party arbitrators or a mediator to address the disputed items among the parties.

In addition to the services previously discussed, practitioners engaged in matters employing ADR can
provide insight and expertise to the client in the process of selecting the appropriate ADR forum, as well
as the appropriate type of qualifications to seek in a third-party neutral arbitrator or mediator. For exam-
ple, should the arbitrator or mediator be a practitioner, an attorney, an industry expert, or a retired judge?
Depending on whether the matter is being litigated, practitioners engaged in an ADR matter may have

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