A $210 million earn-out claim over whether the buyer pushed revenue into a later year on purpose to avoid a contingent payment.
What was at stake
The sellers of a logistics software business claimed our client had pushed revenue into a later year so that an earn-out threshold would be missed.
How we ran it
The case was fought on accounting records. We rebuilt the revenue timeline from contracts and invoices and put it in front of the court in a single chart.
The outcome
After a four-day bench trial the court found that revenue had been recognized in line with the agreed accounting policies.
The judgment addressed how far a buyer's ordinary discretion extends when an earn-out is in play.
The turning point
Contemporaneous board materials showed the timing decisions had been made for operational reasons before the earn-out period began.
The lesson
Earn-out language that leaves the buyer discretion over accounting practice will be read on its terms. Sellers who want protection need to negotiate it at signing.
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