Page 9 - M & A Disputes
P. 9
Subsequent Events ............................................................................................................................................ 34
Materiality ......................................................................................................................................................... 35
Carve-Outs Not in Accordance With GAAP .................................................................................................... 36
Common Areas of Working Capital Disputes .................................................................................................. 36
Drafting Position Statements ............................................................................................................................ 37
Roles for Accountants ....................................................................................................................................... 38
Neutral Accountant or Arbitrator .................................................................................................................. 38
Consultants .................................................................................................................................................... 38
Trial Assistance ............................................................................................................................................. 39
Chapter 3 — Earnout Provisions and Disputes .............................................................................................. 40
Introduction ....................................................................................................................................................... 40
Mechanics of Earnout Adjustments .................................................................................................................. 40
Earnout Adjustments — Common Issues and Key Considerations.................................................................. 42
Management Issues ....................................................................................................................................... 42
Revenue Versus Net Earnings Stream .......................................................................................................... 43
Basis of Accounting to Measure the Target’s Performance ......................................................................... 44
Bundled Product............................................................................................................................................ 45
Recordkeeping .............................................................................................................................................. 45
Postclosing Oversight ................................................................................................................................... 45
Other ............................................................................................................................................................. 46
Chapter 4 — Material Adverse Change Clauses ............................................................................................ 47
Definition of a MAC ......................................................................................................................................... 48
Analyzing a MAC ............................................................................................................................................. 49
The Significance of the Event’s Impact on the Target Company ..................................................................... 49
Duration of the Event ........................................................................................................................................ 50
Disproportional Impact Relative to the Industry .............................................................................................. 51
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