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How to avoid post-merger disputes

On Behalf of | Jan 16, 2019 | Business and Commercial Litigation

As a business owner that has just gone through a merger, you will know that it is very important — both from an employee morale perspective and a logistical perspective — that the process goes as smoothly as possible. When properly planned, mergers can be seamless and can successfully lead to a profitable and more economically efficient company.

However, all too often disputes can arise. These often come about due to a misunderstanding of some detail in the merger, perhaps in the renegotiation of the purchase price or on the earnout metric values that are being tracked. Small- and medium-sized mergers have a greater tendency to result in disputes. It is very important that you do what you can as a company director in the state of Kentucky to prevent post-merger disputes from arising.

Make sure all the necessary clauses are in the contract

A thorough contract that outlines every possible scenario can go a long way toward preventing disputes from arising. Anti-sandbagging clauses can be particularly useful for this purpose. These clauses prevent both parties from using information known before the deal to try to renegotiate post-deal.

Invest in consistent accounting

Using a reputable accounting standard means that all financials will be easy to look back on and investigate if a dispute arises. It will also help avoid arguments stemming from comparability and inconsistency issues.

If you want to avoid disputes as a Kentucky business owner going through a merger, it is important that you take the time to understand how the law can protect you and what you can do to put provisions in place.