The arbitrator awarded substantial damages to our client, a private equity firm.
Retained by Gibson Dunn
Counsel for a private equity firm retained Cornerstone Research and two experts in a post-acquisition dispute between the firm and the seller of the acquired company.
The private equity firm acquired the target company, a privately held automotive component manufacturer, for $100 million. The firm alleged that the seller failed to disclose adverse information during due diligence in order to induce an inflated purchase price. They sought to recover the portion of the purchase price that it believed was in excess of the fair market value of the acquired company.
Cornerstone Research supported Scott Meadow of the University of Chicago and George Strong of Cornerstone Research. Professor Meadow opined on the usual and customary due diligence practices of buyers and sellers in this type of transaction. Mr. Strong provided testimony on damages and valuation. Both experts issued reports, were deposed, and testified in a private arbitration hearing.
The arbitrator found in favor of the private equity firm, concluding that the seller had a duty to disclose the withheld information and that the withheld information had a material impact on the purchase price paid for the target company. He cited the testimony of both Professor Meadow and Mr. Strong, awarding damages consistent with Mr. Strong’s calculations.