Damage Quantification – Earn-Out of Lost Profits Calculation

  • Our client, a large North American electricity and natural gas retailer, was sued by the former owners of one of its acquired subsidiaries. The former owners alleged that they were owed additional monies in connection with an earn-out agreement.
  • Our procedures included a detailed analysis of the very complicated earn-out agreement and the financial statements of the acquired entity, both before and after the acquisition.
  • We computed the amounts due under the earn-out agreement and provided a rebuttal to the former owners’ accounting expert’s report.
  • Shortly after the submission of our expert report, the arbitrators assigned to adjudicate the dispute dismissed the former owner’s claim.

Failed $120-Million Asset Purchase Transaction

  • Ascertained root cause of the acquisition failure through forensic analysis of the transaction.
  • Understood the terms and conditions of the agreement to fully uncover each party’s duties and obligations.
  • Assisted the trier-of-fact in understanding the meaning of accounting related terms, conditions, warranties and representations.
  • Calculated the financial implication of certain terms, conditions representations and warranties.