USING EXPERT DETERMINATION IN M&A DISPUTES
CD: Have you seen a rising adoption of expert determination as a means of resolving M&A-related disputes in recent years? Do you expect expert determination to remain a key method of resolving such disputes?
O’Brien: We rarely see disputes arising on transactions on the sale and purchase agreement (SPA) pre-deal and any that are would typically be resolved through post-deal negotiations without the need to involve an expert determiner. What we do see, though, is that parties tend to favour expert determination as the dispute resolution mechanism, and the majority of SPAs we see include expert determination clauses to resolve any purchase price disputes that arise. This has always been popular and is seen as a way to get straight to an independent expert opinion without the full machinations of litigation.
Orme: When it comes to resolving completion accounts and earn-out consideration disputes, expert determination by an independent accountant has always been and, in my experience, remains the most common mechanism enshrined in SPAs that I have seen for resolving disputes. Arbitration and litigation are popular forums for breach of warranty or other contract breach matters where legal input tends to be more central. Given the heavy accounting component of purchase price adjustments, and parties’ desire to agree the final purchase price fairly swiftly, such disputes lend themselves well to expert determination and I would be surprised if the popularity of this approach starts to wane.
Oct-Dec 2022 issue
Grant Thornton UK LLP