HomeSituationsOwnership & businessValuation and earn-out
TN/SIT/17
Edition 2027 · effective 1 January 2027
Ownership & business · Valuation and earn-out
The deal closed. The number that was supposed to settle later did not.
Earn-outs and completion accounts often become disputes about accounting choices. Expert determination answers the defined question quickly by an expert, rather than slowly by a court.
§ 01What it looks like
Recognise it early. The earliest moment is the cheapest.
What you notice first
Small, and easy to explain away.
- Buyer and seller apply different accounting policies
- Management decisions are said to have depressed the earn-out
- Payment deadlines pass
- Former owners still work in the business
What waiting can cost
Usually more than the original issue.
- A significant price adjustment
- The working relationship with former owners
- Speed of resolution
§ 02The Neutral route
Usually: Expert Determination.
Expert determination is built for defined financial questions and is usually much faster than litigation.
Expert Determination
The expert decides the defined question.
Also used · AdvisoryNeutral Evaluation
You decide. The evaluator advises.
Also used · Binding only if the parties sign an agreementMediation
The parties decide. The mediator never imposes.
§ 03The steps
What a good process looks like.
- Read the SPA dispute mechanismBefore anything else01
- Define the exact question for the expertThe moment independence enters02
- Agree the expert and the procedureWhere the work is done03
- Mediate any wider issuesSo it holds04
§ 04Prepare and avoid
What to bring. What to leave out.
(Bring)
01
SPA and accounting policies
02
Completion accounts
03
Correspondence on the dispute
04
Deadlines
(Avoid)
✕
Letting the expert’s scope stay vague
§ 05Your version
Every situation is different. Describe yours.
§ 06Related