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M&A disputes

• Purchase price adjustments

– A purchase price adjustment is done depending on the negotiation of
the parties and structure of the transaction at hand. The calculation of

this adjustment will vary based on the factors involved and is done to
compensate the parties for variations in balance sheet measures, such
as inventory, working capital, or net assets, at the closing date from the
contractually defined target amount, typically referred to as the “peg.”

• Earnout provisions

– Earnout provisions are clauses sometimes incorporated into acquisition
agreements as a means to make a portion of the consideration to be
paid to the seller contingent on the future performance of the target’s
operations. Such provisions are often used to bridge gaps in perceived

value between the buyer and seller.

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