Series 79 practice questionmediumEarnouts
Which of the following best describes a common method to resolve post-closing disputes relating to the achievement of earnout milestones?
- ARenegotiating purchase price
- BWithholding earnout payments indefinitely
- CEngaging a neutral accountant or arbitrator to make a binding decision✓ Correct answer
- DLitigation in federal court
Explanation
Why C — Engaging a neutral accountant or arbitrator to make a binding decision
Disputes over earnout calculations are typically resolved by a neutral third-party accountant or arbitrator. Resorting to litigation is rare and time-consuming, making arbitration a preferred route.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related M&A, Tender Offers & Restructuring questions
- Which anti-takeover defense involves the target company selling valuable assets to make itself less attractive to an…
- In a forward triangular merger, which entity survives and assumes the target's assets and liabilities?
- Under SEC rules, when a tender offer is made, which document must the target file to communicate its position and…
- A poison pill is designed to prevent hostile takeovers primarily by:
- In an LBO transaction, which of the following typically provides the largest portion of the acquisition financing?
- A merger agreement provides the buyer the right to match any superior proposal received by the target before accepting…
- When a management buyout (MBO) is proposed, which step is most important in managing potential conflicts between…
- A sponsor is evaluating an LBO of a target with $200 million EBITDA and 4x net debt/EBITDA. Senior lenders offer debt…