Series 79 practice questionmediumEarnouts
In a merger, which mechanism is commonly used to resolve disputes over earnout achievement post-closing?
- ABinding determination by an independent accountant✓ Correct answer
- BLitigation in state court
- CUnilateral decision by the acquirer's management
- DRevision of the initial agreement by mutual consent only
Explanation
Why A — Binding determination by an independent accountant
An independent accountant is often used to make binding determinations on earnout calculations. Relying solely on litigation or management discretion is less efficient and riskier.
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