April 27, 2010
K&E on Purchase Price Adjustments
As we've noted before, purchase agreements relating to the acquisition of a private target often contain one or more post-closing purchase price adjustments (for example a working capital adjustment). As this K&E M&A update notes
While the appeal of purchase price adjustments is indisputable, they are often subject to postclosing disputes. One of the drivers of these disputes is inattention to the details of drafting the adjustment provisions, often exacerbated by the fact that these clauses straddle the realm controlled by the legal practitioners and that managed by the financial and accounting experts.
The update offers a plethora of tips on drafting these provisions properly.
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