00:00:00
SRS Acquiom was able to take a $100,000 positive adjustment and turn it into a $2,000,000 result for the sellers without any outside expense.
My name is Casey McTigue. I went to law school at UC Berkeley. It was private-practice litigator for several years and I joined SRS Acquiom in 2013. Since then, I personally worked on several 100 litigations and earnout disputes with the company, and I now am the Managing Director of the Shareholder Representation product. SRS Acquiom handles a bunch of different parts of post-closing merger transactions.
00:00:31
One thing that people hire us for is working capital adjustments and PPAs as we like to call them. We do several hundred of these a year, this particular transaction, billion-dollar deal, no indemnification escrow. So, no claims coming in that we expect. It will really just engage your working capital adjustment. On a billion-dollar deal, sometimes the adjustments are very, very large. This time the adjustment came in at $100,000 in favor of the sellers, which in this compared to the size of the deal, was very small. It turned out that.
00:01:00
As in many cases, the sellers are fine with just accepting that number, but we always like to do a deeper dive just to make sure first thing that we do when we get an adjustment, one of our CPA's or Chartered Accountants from the UK, will take a look and kind of kick the tires and it just takes 30 minutes in most cases and what they found here were a few red flags. They can then send that adjustment to the investors and make a recommendation whether we should investigate further or not. And here we did recommend that we investigate further. And when we did investigate it further, we found a couple key issues.
00:01:33
So those red flags turned out to be real red flags. So here we were able to quickly identify $3 million that we should be getting. There's a clear dispute mechanism in the agreement that we could go after them for, but the parties in the end come together and to avoid all that and avoid expensive any outside parties, settle for $2,000,000.
00:01:50
Quickly get that out to the seller group without any outside expense incurred. In the end, everybody left happy. I think the buyer was happy that the issue was resolved correctly. The seller group was very happy that no outside expense was incurred, and we maintained as always, our solid working relationship with all parties, buyers, sellers, and the Seller Counsel.