Post-closing purchase price adjustments and indemnity claims are common, and they take time and experience to properly resolve. The wrong move can result in prolonged disputes and reduced payouts. An experienced professional shareholder representative can handle issues and achieve better outcomes.
1. Purchase price adjustment (PPA) disputes are common and the use of dedicated PPA escrows is rising
• 50% of deals with a purchase price adjustment mechanism have a buyer-favorable claim
• 68% of 2020 deals had a purchase price adjustment escrow*
• On average, SRS Acquiom has recovered $860K on transactions with a purchase price adjustment dispute†
2. Claims are common
• 38% of all deals [both with and without reps and warranties insurance (RWI)] have an indemnity claim
• 54% of deals that had at least one claim had claims totaling $1MM
• SRS Acquiom has resolved more than 2,750 claims‡
3. Claims are costly
• 18% of claims exceed $2MM
• 33% of claims exceed $500K
• SRS Acquiom has returned over $2 billion to shareholders–54% reduction in total claims.‡
4. Claim frequency is just as common in deals with RWI
• 39% of deals with RWI have indemnification claims
• Most claims are within the escrow fund and still managed by the shareholder rep
5. Claims take time and attention to resolve
• The average claim takes 5.4 months to resolve
• 20% of claims are submitted in the last week of the escrow period
With SRS Acquiom, you gain the most experienced team in the industry to navigate post-closing M&A issues.
Source: SRS Acquiom 2020 Claims Insights Report;
*Source: 2020 SRS Acquiom Deal Terms Study;
†For SRS Acquiom deals spanning 2017–2019.
‡ SRS Acquiom deals