Page 66 - M & A Disputes

The seller’s view is that the buyer is not entitled to damages at the multiple for the following reasons:
the buyer knew of these adjusted items prior to closing, as evidenced by its due diligence efforts; the
target business is performing better than the buyer’s and the seller’s preacquisition forecasts predicted;
the buyer has not been damaged long term because adjustments reflect one-time events for which the
buyer has been compensated in the working capital adjustment calculation; and the seller would not
have accepted any amount lower than the stated purchase price of $1,071 million for the business.

The practitioner should be prepared to address the seller’s rebuttal points with analysis and supporting
documentation. Further, the practitioner should be able to support that the buyer was damaged into per-
petuity as a result of the misrepresentations.

It should be noted that every situation is different. The practitioner should consider the facts and circum-
stances specific to each matter and structure his or her analysis to focus on those aspects.

64 © 2020 Association of International Certified Professional Accountants