Post-Acquisition Purchase Price Dispute
Arbitrator
The buyer and seller of a new community hospital were unable to reach an amicable settlement of a dispute regarding the purchase price working capital adjustment. The working capital adjustment was to be based on the hospital’s audited financial statements and a separate working capital agreement. Rather than rely on an arbitration panel that might not be familiar with the nuances of the hospital industry or hospital accounting issues, both parties chose to have their case heard and decided by HMP.
Issues
- Valuation of patient accounts receivable.
- Balance sheet classification of amounts due to Medicare related to overpayment for Medicare outliers.
- Reclassification of a very large equipment lease from an operating to capital lease and the resulting impact on reported working capital.
- Proper classification on a long-term note that was in default as of the audit date.
Approach
- Developed a working knowledge of the relevant contracts and agreements.
- Organized the arbitration process, including establishing the calendar for discovery, exchange of expert reports, etc.
- Ruled on various pre-hearing motions by the parties .
- Presided over a two-day hearing in which both sides presented testimony.
Result