Post-Acquisition Dispute
Representations and Warranties Insurance Claim
Experts analyzed accounting practices and quantified economic damages in a post-acquisition insurance dispute involving alleged financial reporting errors that affected the purchase price of a business.
Brief
The client, a global defense contractor, purchased a segment of a business that manufactured unmanned underwater vehicles (UUVs). After the acquisition, the client alleged that the business failed to follow proper Generally Accepted Accounting Principles (GAAP) related to percentage of completion (POC) accounting of its contracts. As a result of the accounting errors, the client alleged that the purchase price was overstated.
The client purchased a representations and warranties insurance policy. The client pursued a claim under its insurance policy. When the insurer denied the claim, the client filed a lawsuit in the State of Delaware.
What we did
Initially, HKA experts assisted with preparing the factual record, determining the insurance claim’s damages amount, and participating in fact-finding sessions with the insurer and its consultants.
As part of the lawsuit, HKA issued an expert report based on its analysis of the business’s GAAP accounting and the client’s economic damages. HKA experts also provided deposition testimony.
Outcome
The client received a favorable settlement on the eve of trial.
