Corp America February 2017

CORP AMERICA / FEBRUARY 2017 47 , FTI Consulting is an independent global business advisory firmdedicated to helping organizations manage change, mitigate risk and resolve disputes. We invited Jeff Litvak to provide us with an absorbing overview of the firmand the role he personally has played in its success. Making M&A Manageable FTI Consulting offers a comprehensive suite of services designed to assist clients across the business cycle- from proactive risk management to the ability to respond rapidly to unexpected events and dynamic environments. Jeff, a Senior Managing Director in FTI Consulting’s Forensic and Litigation Consulting practice within its Dispute Advisory Services Group, specializes in forensic accounting investigations and valuation matters, assessment of economic damages, analysis of lost profits, and unity of interest/separateness matters. He has worked with a variety of companies both private and public, from small companies to Fortune 500 companies, and draws on this experience in his current role in order to offer clients the very best service possible and support them through what is often a tough and distressing period. “Personally, I use my years of experience in accounting and business to understand the motivations of both parties involved in litigation. Understanding the perspective of both sides, allows me to inform my clients of the relative strengths and weaknesses of both arguments which helps them to navigate the dispute process in an informed manner. “Throughout my career I have testified in many high profile cases, including testifying between five and ten times in cases in Delaware, where usually the selling shareholders request an appraisal on the basis that the deal price is not indicative of the Fair Value (FV) of the transaction. I have also been a neutral accounting arbitrator over 35 times where I adjudicated working capital matters of significant substance. “Currently my role is as FTI Consulting’s National Product Leaders in merger and acquisition disputes and was formerly the co-chair of the American Institute of Certified Public Accountants (AICPA) Task Force on Merger and Acquisition disputes. My services involve assisting companies with disputes arising from merger and acquisition transactions.” These disputes are varied and can occur at almost any stage in the transaction. Jeff discusses some of the cases he undertakes and how he aims to provide every client with the very best quality support and services. “My work is highly varied and I work on many different cases. For example, as part of the purchase and sale agreement, indemnification provisions are included to protect the buyer and seller from each other’s actions. Indemnification provisions can cover representations and warranties and covenants. Some examples of representations and warranties include that the material information from the business has been disclosed, the financial statements are in accordance with generally accepted accounting principles (GAAP), there has been no material adverse change in the business, and the business has been operated in the normal course. During negotiations on the purchase price, each side will insert language to cap damages arising from specific areas. However, these caps can be negated in the case of intentional fraud or on public policy grounds, such as in disputes arising from gross negligence. “I also assist clients in obtaining damages that stem from the alleged failure to meet representations and warranties involve whether the harmed party received the benefit of its bargain. This involves determining the difference between the gain received had the misrepresentations been true and what was actually received. “Another such area is working capital disputes. Within a certain time period after the closing date of the transaction, the seller must provide a closing balance sheet that includes its working capital. The working capital “true-up” determines the amount of actual working capital at closing compared with what the seller estimated. Since the buyer will seek to deduct any shortfall from the purchase price, which can potentially be a substantial sum, calculating a working capital “true-up” can be a particularly contentious issue between the parties. “Another key area of disputes relates to earn-outs. An earn- out is a contingent element of the acquisition’s purchase price that is determined after the closing based on the target businesses performance against contractually defined criteria or benchmarks. Disputes can arise, for example, from business decisions that negatively affect the performance of the purchased entity, how that performance is measured or how amortization and depreciation is recorded for accounting purposes. “As part of my work, I have prepared reports that calculated damages related to alleged misrepresentations, working capital issues and earn-out disputes. I have also provided expert testimony in Court related to these matters.” Looking ahead, Jeff is optimistic about the opportunities that FTI has in store as it seeks to expand its influence and grow internationally in order to provide its high quality, professional services to more clients around the world. “The future of FTI is very bright as we continue to expand our influence both inside and outside of the U.S. Our past successes have continued to provide us with new opportunities, which have fuelled the growth of our business in all areas.”