Page 78 - M & A Disputes

longer process, can provide a clearer fact pattern and summary of the parties’ positions, as compared
with simultaneous submissions.

It is also a good practice for each party to provide more than one submission. For example, a format al-
lowing each party two submissions on a staggered basis allows each party the opportunity to challenge
facts or statements presented by the other party. Staggered submissions with rebuttals can be a preferred
process to large or complicated disputes. Regardless of the number of submissions and whether they are
submitted on a simultaneous or staggered format, the engagement letter should be clear regarding the
format and due dates for the submissions.

When submitting written statements to the neutral practitioner, the parties often consider the merits of
providing an expert report along with their submissions. Acquisition agreements seldom provide guid-
ance about whether expert reports should be allowed in this process. To the extent that the acquisition
agreement is silent, and the subject is not addressed in the engagement letter, expert reports should be
accepted by the neutral practitioner. Expert reports may provide insight into factual or accounting inter-
pretation issues that might have otherwise not been presented in the submissions and not been brought to
the neutral practitioner’s attention. However, the weight given to such evidence is determined by the
neutral accountant because the neutral practitioner is the expert who has been retained to render a final
and binding decision based upon his or her expertise. Consideration should be given to addressing this
topic in the preliminary conference and including language regarding the submission of expert reports in
the engagement letter.

Questions From the Neutral Practitioner

An additional element to consider as part of the arbitration process is providing the neutral practitioner
with the ability to ask questions. Much like a trier of fact in a courtroom or an arbitration proceeding
may have questions to ask of the parties or witnesses, the neutral practitioner may have their own ques-
tions that have not been answered by the parties in their written submissions. Furthermore, there may be
relevant documents that the practitioner believes exists that have not been provided by the parties. As
such, adding a component by which the neutral practitioner can request additional information, docu-
ments, or further explanations or clarifications of arguments is a recommended best practice.

These questions or requests can be (and often are) made in written form and are noted as a component of
the dispute resolution process in the engagement letter. Alternatively, if the parties have agreed up front
to have a hearing, such questions can be reserved and asked by the practitioner at the hearing. Whether
the process allows for the submission of written questions by the neutral practitioner or requires such
questions to be addressed at a hearing is a matter of preference for the parties and practitioner to discuss
in the preliminary conference.

Neutral Practitioner Interviews

In addition to (or perhaps in lieu of) the neutral practitioner having the ability to ask questions or request
documents, he or she may desire to interview parties to the dispute, employees, and even former em-
ployees regarding the issues in dispute. Generally, if the neutral practitioner thinks that this would be of
benefit, the parties will accommodate the request. This may be important in helping resolve issues when
the facts are not clear or in resolving accounting issues when significant judgment is involved. As noted
in other sections of this practice aid, many of the issues commonly disputed are items where significant
accounting judgment is applied. Allowing the neutral practitioner the ability to speak to individuals who
ultimately evaluated facts and applied critical judgment may help resolve the issue in a more efficient
manner.

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