Key Concepts When Calculating Purchase Price Adjustments

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Purchase price adjustments (PPA) can be beneficial to both the buyer and the seller. They incentivize the seller to operate the company as “normal” before closing, which protects the buyer; if the company is delivered with more working capital than expected, the seller is compensated. Key concepts related to the PPA mechanism, potential obstacles, and deferred revenue on the applicable calculations are illustrated in this document.

SRS Acquiom handles a large volume of working capital adjustments. If not crafted properly, they are a frequent cause of disputes after closing. Our experts can work with the merger parties to help mitigate these issues.

Paul Eastwood

Senior Finance Director, Shareholder Advisory tel:720-799-8604

Paul is a senior finance director in the Shareholder Advisory group at SRS Acquiom, specializing in finance and accounting. He manages post-closing matters and disputes related to purchase price adjustments, earn-outs, and indemnification claims.

Before joining SRS Acquiom, Paul worked at Alvarez & Marsal in Chicago and AlixPartners in London, advising multinationals and private companies on high-value purchase price disputes, commercial litigation, financial damages, and forensic accounting.

Paul holds an MA in Economic History from the University of Glasgow in the UK, and is a Fellow of the Institute of Chartered Accountants in England & Wales (ICAEW).

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