‘What is not disputed, is not very interesting.’
(Johann Wolfgang Goethe, 1749–1832)
If ambiguities or disagreements between the parties occur during a corporate transaction, the transaction often becomes more binding for both parties if a neutral arbitrator is appointed to clarify balance sheet and financial disputes. The independent arbitrator is either appointed because of a clause to this effect in the (company purchase) contract or retroactively by the parties.
The most common points of contention in (company purchase) contracts include:
- Calculation of the working capital or net debt
- Handling of one-off and extraordinary items that were not covered by the contract
- Earn-out computations
- Contract formulations subject to interpretation or invalid formulations
- Handling of accounting changes and ‘new’ balance sheet items
- Accusations of manipulation by the parties (e.g. in connection with balance sheet concealments through the choice of certain accounting rules)
When choosing an arbitrator, it is important to ensure that he/she is not only independent and impartial, but also has the necessary expertise and experience. This is the only way to ensure that differences of opinion between the parties to the contract relating to content or interpretation of a (company purchase) contract will actually be conclusively resolved. After all, obviously unreasonable decisions by an arbitrator are not binding for the parties.
Our professionals have in-depth accounting knowledge, proven financial and economic understanding, and extensive transaction experience, as well as ensure transparent project management. The composition of our team is always oriented around the points of contention to be analysed in terms of skills and experience. Depending on the task in hand, this not only means experienced corporate finance experts and auditors, but also our commercial lawyers, tax consultants, US GAAP/IFRS specialists and, in case of manipulation allegations, our forensics experts.
Using our in-depth knowledge and experience with respect to national and international arbitration, and our practical understanding, many confrontations between contending parties due to different interpretations have been successfully resolved in the past.
Practical considerations: we support you in the various stages of negotiating a corporate transaction. Call us in to analyse your (company purchase) contracts in advance of signing (contract support) in order to minimise the risk of future disputes by following our wording suggestions.
In case of conflict situations occurring during the transaction process, we also support you in the function of an arbitrator or mediator.