In September 2023, an arbitral tribunal under the auspices of the Danish Institute of Arbitration ruled in favour of the buyer, an international conglomerate, represented by Accura in a DKK 50+ million post-M&A dispute. The seller, the former owner and CEO of the acquired company, had initiated arbitral proceedings and claimed payment of an earn-out based on the share purchase and transfer agreement (SPA) between the two parties.
The dispute mainly concerned whether the international conglomerate had lost its right to dispute the underlying numbers in the seller’s earn-out calculation. In this respect, the tribunal found that, at the time when the seller presented its earn-out calculation, the international conglomerate did not go into the calculations in details because it did not consider the threshold for an earn-out payment to be reached. Additionally, the tribunal highlighted that it was not reasonable of the seller to believe that the international conglomerate had waived its right to claim adjustments of the calculations on this basis.
The next step for the tribunal was to determine if the threshold for the earn-out had been reached by assessing nine specific adjustments requested by the parties on the basis of SPA-based adjustments and accounting information. Based on an assessment of these individual sub-issues, the tribunal found that the threshold had not been reached, meaning that no earn-out was payable to the seller.
The final issue was whether the seller was entitled to an additional and separate payment based on the development in target’s net working capital. The wording in the SPA on this topic was ambiguous, and, therefore, the tribunal attempted, without luck, to determine the intentions of the parties at the time of the negotiations. In the end, the determining factor was that the seller’s interpretation was commercially nonsensical, and that the seller had not lifted the burden of proof for its interpretation.
Therefore, the tribunal rejected all the seller’s claims and granted the international conglomerate full reimbursement for the costs.
Accura represented the international conglomerate in the arbitral proceedings.