Post-acquisition disputes are triggered by a myriad of issues between the buyer and seller, with most revolving around purchase price adjustments. Executive Summary While a standard level of financial due diligence is common to almost all insurance M&A transactions, a more comprehensive “deep dive” due diligence, or 4D, into a seller’s operations and infrastructure can uncover hidden risks and reveal a path to early resolution of purchase price adjustment disagreements, experts from FTI Consulting explain.
The genesis of purchase price adjustment disputes, however, lies not only within the underlying numbers of the financial statements. Disputes also may be affected by imprecision of underlying information, ambiguity of supporting documents such as insurance policies and reinsurance agreements, or the inability of the parties to communicate effectively.
Each of these factors can increase the difficulty of establishing facts and value, adding to the cost of dispute resolution.