Post-Merger Disputes
Post-merger disputes often involve the extent to which the buyer was provided accurate information regarding the target’s financials and operations during the due diligence process. Post-transaction litigation involves disputes related to earn-out clauses and other post-closing price adjustment mechanisms.
Our experts have assisted in suits filed after a merger, in which we have analyzed:
- Earn-out clauses: Disputes may center on provisions around the deal price, which includes a future payment contingent on meeting an agreed-upon performance bar. A key issue is often whether the bar has been met and if not, why.
- Post-close price adjustment (“true up”): The disputed issue is the amount of the target firm’s working capital that is transferred to the acquirer, and whether and by how much the threshold should be adjusted, or “trued-up.”
- Misrepresentation: Allegations often include fraudulent or inaccurate disclosures, representations, and warranties, or inadequate due diligence.
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Featured Expert
Andrew Metrick
Janet L. Yellen Professor of Finance and Management, Yale School of Management
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Case Outcome
Rohm and Haas Co. v. The Dow Chemical Co.
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Publishing
The Shrinking Merger Arbitrage Spread: Reasons and ImplicationsFinancial Analysts Journal
- Related Practice Securities Fraud
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Forum
The Cost of Disclosure: Audit Fees and Liability Claims May Be on the Rise
