In virtually all mergers & acquisitions, issues arise that were not contemplated when the transaction was consummated. Commonly, these issues revolve around complex accounting and valuation issues that require specialized knowledge and expertise. We have been actively involved in helping parties resolve these issues for decades. Disputed issues can range from the straightforward – unrecorded liabilities – to the esoteric – the evaporation of financing caused by a once in a generation “great recession.” We assist our clients by uncovering the causes and consequences of the disputed issues and boiling them down into manageable pieces that can be negotiated or litigated.

Representative Engagements

Minority Shareholder Oppression

• Our client was a minority shareholder, family member and employee of a middle-market, family owned food wholesaler.
• As the third-generation of family members took over the business, our client entered into a stock option purchase agreement to sell her shares to the third – generation family members at a stated price, at any time during a 10 year period – with the stipulation that the purchase had to be completed at the agreed price by the end of the 10-year term.
• As the end of the 10-year period approached, our client became concerned that the stock sale would not be consummated because the financial condition of the business was deteriorating and that the third-generation owners were actually shifting operations to a new entity that they wholly owned.
• After analyzing the general ledgers, financial statements and tax returns of the businesses, we were able to identify several potential breaches of the stock option purchase agreement by the third-generation family members.
• Our analysis also identified several examples of self-dealing on the part of the third-generation owners.
• After presenting the results of our analysis at a court ordered mediation, the dispute was settled.

Earn-Out Calculation

• Our client, a large North American electricity and natural gas retailer, was sued by the former owners of what became one of our client’s 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

• Our client was the owner of several television and radio stations who had signed an agreement to sell the stations in early 2008, prior to the event known as the great recession.
• The buyer failed to close on the transaction, alleging that our client had misrepresented the financial condition of the media properties.
• Our client sought the buyer’s earnest money as a result of the failure of the buyer to close on the transaction.
• Our work included an analysis of the root cause of the acquisition failure through forensic analysis of the transaction.
• We assisted the trier-of-fact in understanding the meaning of accounting related terms in the agreement and calculated the financial implication of certain terms, conditions representations and warranties.