M&A Disputes: A Professional Guide to Accounting Arbitrations

Merger and acquisition (M&A) transactions commonly incorporate contractual post-closing purchase price adjustment mechanisms. In many instances the post-closing purchase price adjustment process is completed smoothly and collaboratively. In other cases, the post-closing purchase price finalization can lead to disputes between the buyer and the seller that can involve substantial amounts and potentially make or break the deal. Those disputes are often brought before independent accountants for resolution.

M&A Disputes allows you to confidently navigate the post-closing purchase price adjustment landscape with firsthand insights from two highly experienced M&A dispute professionals. The combined expertise of the authorial team quickly brings you up to speed on the post-closing adjustment mechanisms and the dispute resolution process with an easy-to-understand framework before engaging in an in-depth discussion of the various facets of M&A disputes.

M&A Disputes provides a comprehensive walkthrough of the entire M&A dispute resolution process, from selecting an accounting arbitrator through final award. It also provides helpful tips to pre-emptively mitigate and possibly avoid costly breakdowns during the post-closing purchase price adjustment process. Whether you are working in-house or at a professional services firm, its in-depth coverage serves as a road map for achieving optimal results.

This go-to reference will remain close at hand because it:

• Brings clarity to core concepts and issues underpinning purchase price adjustment mechanisms and disputes, including the nature of GAAP, the consistent application of historical accounting practices, target net working capital, transaction-specific adjustments, and more
• Goes in-depth to demystify what drives disputes in general and provides detailed discussions on common categories of disputes, including inventory, accounts receivable, contingent liabilities, and revenue recognition
• Provides practical guidelines for preparing and presenting submissions to the accounting arbitrator, along with an insider’s look at the resolution of such disputes from the arbitrator’s perspective

M&A Disputes provides the advice, tools, and in-depth coverage that will prove invaluable to the transaction parties, legal counsel, accounting advisors, and would-be or experienced accounting arbitrators

Table of Contents

Preface

Acknowledgments

About the Authors

Part 1: The M&A Dispute Framework

Chapter 1: Introduction to M&A Disputes

Chapter 2: The Post-Closing Adjustment and Dispute Process

Chapter 3: Post-Closing Net Working Capital Adjustments

Part 2: The Core

Chapter 4: The Nature of GAAP

Chapter 5: Past Practices in Accordance with GAAP

Chapter 6: Target Net Working Capital

Chapter 7: Transaction Specific Adjustments

Chapter 8: Audited Financial Statements and Auditing Concepts

Chapter 9: Subsequent Events, New Positions, and New Information

Part 3: The Accounting Arbitration

Chapter 10: Mitigation of Post-Closing Purchase Price Disputes

Chapter 11: Selection and Retention of an Accounting Arbitrator

Chapter 12: The Parties’ Initial Submissions

Chapter 13: Further Submissions, Proceedings, and Considerations

Chapter 14: The Arbitration Award

Part 4: The Disputed Items

Chapter 15: Overview of Disputed Items

Chapter 16: Inventory

Chapter 17: Accounts Receivable

Chapter 18: Contingent Liabilities

Chapter 19: Revenue Recognition and Expense Accruals

Part 5: Other Topics

Chapter 20: Governing Agreements and Contractual Choices

Chapter 21: Interaction with Indemnification Provisions

Chapter 22: Other Mechanisms, Earn-Outs, and Locked Boxes

Chapter 23: International Considerations

Index