Table Of ContentPost-acquisition
disputes
KPMG Forensic
September 2016
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Contents
KPMG’s post-acquisition disputes services 02
Completion accounts disputes 04
Warranty disputes 06
Independent accountant expert determinations 08
Case studies 10
© 2016 KPMG PL , a KU limited liability partnership and a member firm of the KPMG network of independent Post-acquisition disputes 1
member firms affiliated with KPMG International K“( PMG International ,)” a Swiss entity. All rights reserved.
KPMG’s post-acquisition
disputes services
KPMG’s Forensic team provides KPMG’s Dispute Advisory Services Disputes arising from acquisitions
accounting, economic, loss team assists litigants and their legal and disposals, as well as other forms
quantifcation and valuation-related counsel with potentially costly and of commercial agreements, have
advice and opinions as well as disruptive disputes and litigation. become increasingly common and
document disclosure services. KPMG delivers a wide range of complex in today’s marketplace.
Our objective assessments help services to assist with the resolution
Because of the complexities,
to resolve disputes in arbitration, of disputes including:
differing interpretations of accounting
litigation, insurance claims
• Forensic accounting investigations principles, and the lack of specifcity
and transactions. We serve as
around the fnancial provisions in
consultants, expert witnesses, • Early case assessment
many sale and purchase agreements,
arbitrators and independent
• Document and electronic record buyers and sellers often fnd
accountant experts. We also
disclosure themselves in dispute over these
support parties in negotiations and
provisions (such as fnal adjustments
mediations. • Data analysis
to consideration and earn-out
When disputes arise, it is important • Corporate intelligence provisions). Additionally, inadequate
to gather the relevant facts, isolate up-front due diligence can often
• Valuations
and understand the key business lead to unforeseen obligations or
and fnancial issues so as to identify • Economic analysis exposures that may not have been
the economic implications as soon contemplated by the parties, which
• Accounting and auditing expertise
as possible. Disputes can involve could result in an unexpected
complex economic, fnancial and • Damages assessment reduction to consideration or a
technical issues as well as multiple potential warranty claim.
• Advice on negotiation strategy
client locations and applicable
laws and standards. Parties with • Expert witness testimony
an understanding of the issues
• Independent expert determination
can make better decisions when
responding to disputes.
2 Post-acquisition disputes © 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International (“KPMG International”), a Swiss entity. All rights reserved.
Post-completion acquisition
related dispute advisory services
Preparation or review of completion accounts
• Assistance in preparing completion accounts
• Calculation of purchase price adjustments
01
• Review of closing accounts to ensure consistency with the
accounting principles set forth under the agreement
Dispute notice and good faith negotiations
• Review of draft completion accounts/earn-out statement
• Assistance with preparing any objection or dispute notice
02
• Assistance with strategy for good faith negotiations
• Drafting position statements on the disputed items
• Advising on discovery issues and access to books and records
Dispute resolution process
• Advising on the selection of the independent accountant or
being that accountant
03
• Assisting as advocate in presenting the position to the
independent accountant
• Acting as the independent expert witness
• Providing independent determination or arbiter services
• Assisting with international arbitration or local courts and
arbitrations
© 2016 KPMG PL , a KU limited liability partnership and a member firm of the KPMG network of independent Post-acquisition disputes 3
member firms affiliated with KPMG International K“( PMG International ,)” a Swiss entity. All rights reserved.
Completion accounts
disputes
KPMG advises on the preparation or
review of completion accounts and
dispute or objection notices, provides
support in settlement negotiations,
and helps to present a client’s case
before an independent accountant/
determiner, both orally and in writing.
Some questions to consider:
• Is there a likelihood of a dispute
over one or more of the balance
sheet areas in the completion
accounts?
• Do you think that you have paid
too much for a business?
• Have you received a dispute or
objection notice from the other
party?
• Are you fnding it diffcult to
negotiate the resolution of
disputed items with the other
party?
• Have settlement negotiations
broken down?
• Have you or the other party
invoked the expert determination
clause in a sale and purchase
agreement?
4 Post-acquisition disputes © 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International (“KPMG International”), a Swiss entity. All rights reserved.
KPMG Forensic can help:
You may need We provide Potential benefts to you
Assistance in preparing or reviewing Assessment of whether the Identifcation of adjustments
completion statements. completion statements have been that could impact the value of
prepared in accordance with the consideration paid by the buyer or
provisions in the sale and purchase received by the seller.
agreement.
Assistance in preparing or reviewing Identifcation of items which can be Awareness of the strengths and
a dispute notice. taken forward for determination by weaknesses of your case and an
an independent accountant. ability to negotiate from a position
of strength.
Assistance in settlement Assessment of the strength of your A fair and satisfactory result and
negotiations. position. Identifcation of a likely faster resolution of a dispute, saving
range for settlement. time and money.
Advice on selecting an independent Help in sourcing an experienced A qualifed expert with a suitable
accountant and negotiating terms of independent accountant, negotiating timetable and terms of engagement
reference. timetables and the process. to determine your case.
Assistance in the preparation of A professionally prepared report or Credible and professional
submissions, both oral and written, presentation which explains your presentation of your case by
to an independent accountant. position effectively and forcefully. experienced forensic accountants.
The appointment of an independent Independent accountants who An objective determination or award
accountant to determine or arbitrate are experienced determiners and settling the dispute.
the matters in dispute. arbitrators (see page 8).
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent Post-acquisition disputes 5
member firms affiliated with KPMG International (“KPMG International”), a Swiss entity. All rights reserved.
Warranty disputes
A KPMG professional can advise you Some questions to consider: • Are you facing a warranty claim
or your client in a warranty dispute which is diverting management’s
• As a purchaser, are you concerned
and act as an expert witness where time from running your business?
that fnancial, commercial or
appropriate. Warranty claims arise
accounting information which has • Do you need help to quantify the
when a purchaser discovers after
come to light post-acquisition amount of a warranty claim or to
completion a difference between the
would have affected the purchase evaluate, document and present
acquired business as warranted and
price if you had been aware of it your position in a warranty
its condition at the date the vendor
beforehand? dispute?
gave the warranties, subject to any
disclosures. • Are you unsure whether a • Are you in need of a credible
fnancial or accounting warranty independent expert witness
has been breached? opinion to help resolve a warranty
dispute?
6 Post-acquisition disputes © 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International (“KPMG International”), a Swiss entity. All rights reserved.
KPMG Forensic can help:
You may need We provide Potential benefts to you
• Dispute advisory services • Wide-ranging industry focused • An accurate assessment of your
in presenting or defending a tactical advice and experience in position as soon as possible.
claim for breach of fnancial or the dispute process.
• A realistic view of the reasonable
accounting warranties.
• Effcient project management, settlement range to allow you
• Quantifcation of damages, an document control and disclosure to negotiate from an informed
evaluation of the likely outcome management. position.
of the dispute, and assistance in
• Objective opinions on the • A credible presentation of the
negotiations.
strengths and weaknesses of evidence by a reputable expert
• An impartial assessment of the your case. witness.
warranty claim and strong expert
• Robust and credible expert • Clear and objective reports that
testimony.
witnesses with considerable provide a powerful presentation
• A high quality realistic, experience of cross-examination. of facts, opinions and
written report setting out the conclusions.
• Reports drafted with
factual details and arguments
precision and clarity, readily
concerning the warranty claim.
comprehensible to the non-
accountant.
© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent Post-acquisition disputes 7
member firms affiliated with KPMG International (“KPMG International”), a Swiss entity. All rights reserved.
Independent
accountant expert
determinations
KPMG professionals have been As with other forms of alternative a knowledgeable and experienced
appointed on many occasions as dispute resolution, the benefts individual who understands not only
an independent accountant to of expert determinations lie in the process to be followed but also
carry out expert determinations. their greater speed and lower the industry sector practices relevant
Our team is represented on the costs in comparison to litigation or to the dispute.
Institute of Chartered Accountants arbitration. We understand that, in
in England and Wales (ICAEW) list of order for these to be realised, the
independent accountants. process must be run effciently by
8 Post-acquisition disputes © 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International (“KPMG International”), a Swiss entity. All rights reserved.
