M&A Disputes (eBook)

A Professional Guide to Accounting Arbitrations

A. Vincent Biemans, Gerald M. Hansen (Autoren)

eBook Download: PDF

2017 | 1. Auflage
384 Seiten
Wiley (Verlag)
978-1-119-33193-3 (ISBN)

Infos

Navigate M&A accounting arbitrations with insider perspective

M&A Disputes takes you inside the dispute resolution process to help you put together the many 'moving parts' necessary to obtain a successful outcome. With deep insight from experts in the field-including valuable advice from the arbitrator's perspective-this book guides you through the entire process to explore the variables at work. The high volume of M&A transactions makes post-closing price adjustment provisions and accounting arbitrations a critical part of doing business. Yet, the field is opaque to non-practitioners and important issues can be easily misunderstood without specific knowledge and experience. A resulting award can make or break a transaction; an intimate understanding of the process's inner working can help you plan your position to the greatest advantage. This book explores the many factors that that contribute to a successful resolution across the entire transaction life cycle from contract negotiation through the dispute phase including due diligence, determination of the target net working capital, conception and closing of the purchase agreement, post-closing negotiation and dispute resolution, the impact of accounting practices, guidance, and documentation as well as relevant auditing concepts, and various facts and circumstances surrounding the target business and the transaction that need to be considered.

M&A volume remains high and continues to result in large numbers of current and future post-closing M&A disputes. Clients rely on their attorneys and advisers to guide them through the process and counsel them toward a positive outcome. Those professionals will find that M&A accounting arbitrations carry a range of distinctions that require a specialized knowledge base to navigate correctly. This book provides real-world guidance from experts in the field, with invaluable insight for every stage of the process.

• Walk through the entire dispute resolution process from arbitrator selection through final award
• Understand how M&A agreement provisions impact the awarded amount as well as the options available to limit the scope of potential disputes and the 'gaming' of the post-closing process by the counterparty
• Understand the nature of accounting estimates and guidance, their interaction with accounting arbitrations, and how to synthesize facts, circumstances, and GAAP into a persuasive argument to present to the accounting arbitrator
• Get situation-specific advice for different types of transactions
• Learn practitioner 'dos' and 'don'ts' from the arbitrator's perspective

M&A Disputes provides transaction parties and their representatives an inside view at the transaction and commonly disputed items through the eyes of the arbitrator to provide them with uniquely valuable insight.

In addition to being an invaluable tool for practitioners appearing before an accounting arbitrator, M&A Disputes also provides advice to would-be and experienced arbitrators alike to successfully resolve disputes that can be significant and complex.

VINCENT BIEMANS and JERRY HANSEN are managing directors of Berkeley Research Group. They assist U.S. and European clients with their M&A disputes. They serve as accounting arbitrators retained jointly by buyers and sellers. They also advise individual parties, whether buyer or seller, during the post-closing negotiation and dispute phases. Their experience spans a wide range of transactions, industries, and deal and dispute sizes.

Inhalt

Cover 1
Title Page 5
Copyright 6
Contents 9
Preface 13
Acknowledgments 17
About the Authors 19
Part One: The M& A Dispute Framework
Chapter 1: Introduction to M& A Disputes
The Transaction Lifecycle 23
Categories of Purchase Price Adjustment Provisions 26
Accounting Arbitrations versus Expert Determinations 31
Overview of the Book 31
Note 33
Chapter 2: The Post-Closing Adjustment and Dispute Process 34
From Closing to Dispute 34
The Dispute Resolution Process 40
Chapter 3: Post-Closing Net Working Capital Adjustments 46
Net Working Capital Estimation and Adjustment 47
An Approach to Defining and Quantifying Net Working Capital 50
The Demarcation and Quantification of Net Working Capital 52
Notes 60
Part Two: Core Concepts and Issues 61
Chapter 4: The Nature of GAAP 63
Background of GAAP 63
GAAP Is Not Necessarily Narrowly Prescriptive 64
GAAP Is Not a Free-for-All 67
GAAP by Itself Is Too Broad for Closing Date Accounting in Many Situations 70
Notes 72
Chapter 5: Past Practices in Accordance with GAAP 74
Past Practices in Accordance with GAAP Does Not Necessarily Narrow Down the Applicable Accounting to a Single Point Estimate for All Accounts under All Circumstances 75
Complications of Utilizing Past Practices 80
Past Practices Would Violate GAAP 87
Consequences of the Application of Past Practices Being in Contravention of GAAP 91
Procedural Mitigation of Multiple Potential Outcomes 94
Notes 100
Chapter 6: Target Net Working Capital 101
Approaches to Determining the Target Net Working Capital 102
Considerations in Determining Target Net Working Capital 105
Consequences of Discrepancies 109
Chapter 7: Transaction-Specific Adjustments 112
Potential Candidates for Special Treatment 113
Considerations in Implementing Custom Provisions 118
Chapter 8: Audited Financial Statements and Auditing Concepts 126
The Audit of Financial Statements 127
Relevance of an Audit and Audited Financial Statements in an Accounting Arbitration 128
Limitations on the Relevance of a Financial Statement Audit in an Accounting Arbitration 132
The Concept of Professional Skepticism 136
Notes 136
Chapter 9: Subsequent Events, New Positions, and New Information 137
Subsequent Events 138
Procedural Deadlines for New Positions and New Information 144
Notes 152
Part Three: The Accounting Arbitration 153
Chapter 10: Mitigation of Post-Closing Purchase Price Disputes 155
Due Diligence 155
Documentation of Past Accounting Practices Is Critical 161
The Pre-Closing and Post-Closing Teams 164
Negotiation of Disputed Items Prior to the Accounting Arbitration 165
Chapter 11: Selection and Retention of an Accounting Arbitrator 168
Terms of the Purchase Agreement 168
Consideration of the Qualifications of the Accounting Arbitrator 170
Engagement of the Accounting Arbitrator 172
Chapter 12: The Parties' Initial Submissions 178
Introduction to the Initial Submissions 180
Background of the Transaction and the Dispute 181
Unique Accounting or Industry Considerations 183
Discussion of Individual Disputed Items 185
Supporting Documentation 187
References to Authoritative Guidance 190
Give the Arbitrator Options 192
Conclusion 194
Note 194
Chapter 13: Further Submissions, Proceedings, and Considerations 195
Rebuttal Submissions 195
Expert Reports and Affidavits 197
Interrogatories and Document Requests 201
Hearings 203
Chapter 14: The Arbitration Award 208
Professional Standards 209
Applicable Agreements 210
Consideration of Submitted Information 211
Independence and Impartiality 212
Resolve All Disputed Items 213
The Weight Given to Evidence Provided 215
Allocation of the Fees and Expenses of the Accounting Arbitrator 216
Types of Arbitration Awards 217
Note 222
Part Four: The Disputed Items 223
Chapter 15: Overview of Disputed Items 225
Net Working Capital under GAAP 225
Common Drivers of Disputed Items 229
The Impact of Other Circumstances 233
Miscellaneous Disputed Items 237
Notes 240
Chapter 16: Inventory 241
GAAP Guidance Related to Inventory 242
Buyers and Sellers Can Have Differing Views Regarding the Value of Inventory 245
Disputed Items Related to Inventory 247
Presenting and Resolving Inventory-Related Disputed Items in an Accounting Arbitration 253
Resolving Inventory-Related Disputed Items 263
Notes 265
Chapter 17: Accounts Receivable 267
GAAP Guidance Related to Accounts Receivable 268
Buyer's and Seller's Differing Views Regarding Collectability 272
Accounts Receivable Disputed Items 273
Presenting and Resolving Net Accounts Receivable Disputed Items in an Accounting Arbitration 278
Notes 285
Chapter 18: Contingent Liabilities 287
The Potential Impact of Subsequent Events on Contingencies 290
Litigation Accruals 291
Warranty Accruals 293
Contingent Tax Exposure 295
Potential Mitigation of Certain Contingent Liabilities 295
Notes 297
Chapter 19: Revenue Recognition and Expense Accruals 298
Revenue Recognition 298
Vacation and Other Payroll Accruals 301
Bonus Accruals 302
Tax Accruals 305
Prepaid Expenses 307
Part Five: Other Topics 309
Chapter 20: Governing Agreements and Contractual Choices 311
Past Practices in Accordance with GAAP 312
Transaction-Specific Treatment 316
Procedural Choices 320
Chapter 21: Interaction with Indemnification Provisions 326
Indemnification Provisions 326
Representations and Warranties 327
The Net Working Capital Adjustment Process Can Overlap with Indemnification Provisions 328
The Combination of Net Working Capital and Indemnification Provisions Can Lead to a Windfall 332
Excluding Indemnifiable Items from the Net Working Capital Calculation 335
Note 336
Chapter 22: Other Mechanisms, Earn-Outs, and Locked Boxes 337
Pre-Closing EBIT/EBITDA Adjustments and Disputes 338
Earn-Out Adjustments and Disputes 341
Adjustment Mechanisms Related to Capital Expenditures 350
The Locked Box: An Alternative to Post-Closing Adjustments? 352
Transaction Fraud 356
Chapter 23: International Considerations 357
U.S. GAAP, IFRS, and Local GAAP 358
Differences in Legal Systems 364
Other Considerations 364
Note 365
Index 367
EULA 386

Produkt-Details

• Erscheint lt. Verlag: 10.7.2017
• Reihe/Serie: Wiley Finance Editions
• Reihe/Serie: Wiley Finance Editions
• Sprache: englisch
• Themenwelt: Mathematik / Informatik ► Mathematik
• Themenwelt: Recht / Steuern ► EU / Internationales Recht
• Themenwelt: Recht / Steuern ► Privatrecht / Bürgerliches Recht ► Zivilverfahrensrecht
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Planung / Organisation
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Rechnungswesen / Bilanzen
• Schlagworte: Accounting • Accounting Special Topics • Business & Finance • Mathematics • Mathematik • Mathematik in Wirtschaft u. Finanzwesen • Rechnungswesen • Spezialthemen Rechnungswesen
• ISBN-10: 1-119-33193-5 / 1119331935
• ISBN-13: 978-1-119-33193-3 / 9781119331933