Purchase Price Disputes Case Studies

Post-Close Due Diligence

A $10 billion worldwide auto parts manufacturer was involved in a purchase price dispute involving more than 100 dispute items totaling approximately $230 million. We were retained by the manufacturer to perform extensive post-close due diligence of the sellers closing balance sheet at various locations in both the United States and Europe. In addition, we advised the client on the arbitration process and strategies, as well as on a potential settlement. We analyzed numerous balance sheet items including pensions, warranty liabilities, inventories, loss contracts, tooling costs, fixed assets, receivables, workers’ compensation, environmental liabilities, and capitalized software costs, related to operations in the U.S., Germany, Spain, Mexico, Hungary and China.

Solvency and Mac Issues

A specialty retailer agreed to purchase the outstanding stock of a similar retailer. As part of the transaction, an investment bank agreed to finance the deal. Subsequent to the agreement, both the financial performance of the company and the overall credit markets deteriorated, and the investment bank filed suit claiming the combined entity would be insolvent, thus voiding the financing commitment. AlixPartners was hired by counsel for the investment bank to analyze the solvency and MAC issues, and determined that the combined company would be insolvent. The investment bank agreed to a cash settlement that was less than the hundreds of millions of dollars it expected to lose on the syndication of the debt if the merger was consummated.