Page 40 - M & A Disputes

with the strategy and nuances of M&A disputes. Outside practitioners can develop unbiased advice in
approaching disputes and can identify alternative strategic options. Moreover, outside practitioners do
not usually carry emotional attachments to the transaction. The practitioner who serves as a consultant or
an expert witness on behalf of one of the parties (or as an independent arbitrator) can enhance and often
expedite the dispute resolution process for the client. The reporting should include accounting evidence
and detailed reference analysis of the applicable proper accounting standard. Additionally, all relevant
documents, interviews, and information should be referenced in the report.

Roles for Accountants

Neutral Accountant or Arbitrator

Practitioners may serve as arbitrators in resolving M&A disputes because they have experience in the
accounting and financial reporting issues on which such disputes usually focus. As arbitrators, practi-
tioners may set the agenda for the arbitration proceeding by identifying the documents to be filed with
the arbitrator, establishing the time frame for their receipt, and holding hearings on the evidence. In the
role of arbitrator, the practitioner will evaluate the merits of each party’s position and ultimately rule on
the items in dispute. Serving as an arbitrator allows the practitioner to experience the role of trier of fact
and enhances the practitioner’s ability to represent other clients in consulting or expert witness roles.
This topic will be discussed in further detail in chapter 6, "Role of the Neutral Practitioner," of this prac-
tice aid.

Consultants

The practitioner can assist one of the parties in calculating the adjustments necessary to conform to the
closing balance sheet of the agreement. The practitioner can also identify and develop the support in the
form of calculations, arguments, or documents. This analysis can convince a trier of fact that a given po-
sition, either the buyer’s or seller’s, is appropriate.

The practitioner can provide expertise in interpreting the technical accounting literature and practices
that compose GAAP in the context of the proposed adjustments.

A seller should submit its objection notice in the form that the agreement requires. Failure to do so could
result in the buyer rejecting proposed purchase price adjustments. Listing all agreement sections that the
buyer has violated will strengthen a seller’s claim. The practitioner can help review the agreement and
decide which sections apply to various alleged misstatements in the closing balance sheet.

While assisting a seller in preparing an objection, the practitioner can identify strengths and weaknesses
in each position and anticipate likely responses from the buyer. In addition, the practitioner can help a
seller evaluate the likelihood of success for each of the disputed items. This can contribute to the parties
reaching a settlement with respect to the disputed issues and avoiding the arbitration or litigation of such
matters.

The practitioner can also play a role in the increasingly popular alternative dispute resolution (ADR)
system. If the practitioners represent one of the parties to an arbitrated dispute, the professional services
that they provide will likely resemble those that practitioners may provide during litigation; however,
there are some important differences. First, practitioners may help a client select the appropriate forum
for resolving disputes. Practitioners can inform their clients of the relative merits of the dispute resolu-
tion alternatives, such as mediation, and practitioners can offer insight into the qualifications that the
mediator or arbitrator should possess.

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