Purchase Price Adjustment Dispute

Professor John Owens testified in an arbitration hearing involving a purchase price adjustment dispute.

Cornerstone Research and John Owens of the University of Southern California were retained by the buyer in a dispute involving the target company’s purchase price adjustment. The purchase price was based on a multiple of the target’s EBITDA, with a provision to adjust the price based on changes in its working capital subsequent to the acquisition.

In addition to disputing the working capital adjustment, the buyer also asserted that the target’s financial statements did not comply with GAAP, and thus the purchase price was overstated.

Professor Owens concluded that the target’s financial statements failed to comply with GAAP and calculated the impact of the GAAP errors on the purchase price.

Professor Owens analyzed the disputed items, submitted two expert reports, and testified in an arbitration hearing. He concluded that the target’s financial statements failed to comply with GAAP and calculated the impact of the GAAP errors on the purchase price.

The parties reached a settlement prior to the arbiter’s ruling.