A disputed purchase-price adjustment rarely turns into litigation. Most acquisition agreements route it somewhere narrower and faster — an independent accountant, deciding one defined question, on a clock the agreement already set.
Key takeaways
One Ontario post-closing guide draws the line precisely: unresolved items on a purchase-price true-up go “to an independent accountant acting as an expert rather than an arbitrator — whose determination is usually final and binding with no appeal.” That is a narrower mandate than arbitration. An arbitrator hears both sides argue a dispute and rules on it; an expert applies a defined accounting standard to a defined set of facts, without the same procedural apparatus — which is faster and cheaper, but only works if the agreement actually says which standard the expert is applying.
The same source is blunt about where these disputes actually come from: “the fights are about accounting policy: whether a receivable is collectible, how inventory is valued, whether an accrual should have been booked.” None of that is a disagreement about how to add numbers up — it is a disagreement about which of two defensible accounting treatments the agreement's own policy language requires.
The pattern lines up with what shows up during diligence in the first place. Deavo's guide to reading financial statements before a purchase flags “accounts receivable growing faster than revenue” and “rising inventory levels without a matching increase in sales” as red flags worth investigating before signing — the same two line items that, left unresolved at diligence, tend to resurface as the disputed items in the completion accounts six weeks later.
A working-capital true-up is not the only post-closing mechanism that can end in a dispute. the sister firm's escrow and holdback page describes a parallel but distinct process for a holdback claim: a properly drafted escrow agreement “requires written claims with particulars by a deadline, releases automatically anything not claimed, and sends the disputed balance to arbitration on a short timetable.” That is deliberately faster than an open-ended expert referral, because it is protecting against a different risk — an indemnity claim on a specific loss, not a disagreement about how to value a balance sheet.
Confusing the two clauses at drafting stage — or worse, letting one silently cover both risks — is a common source of confusion when a real dispute actually lands. Knowing in advance which clause a given disagreement falls under saves weeks of arguing about process before the parties get to the substance.
Most agreements deliberately narrow the grounds to challenge an expert's determination once it is issued — that is the entire point of choosing expert determination over litigation or arbitration in the first place. What that means in practice depends entirely on how the specific agreement is drafted, since Canadian courts generally hold parties to a contractual finality clause they agreed to. A buyer who wants any right to challenge the outcome has to negotiate that carve-out into the clause itself, before signing, rather than assume a general legal right to revisit an unfavourable result afterward.
A true-up dispute is easy to confuse with an indemnity claim, and the two are structured differently on purpose. An indemnity claim usually runs against a basket and a cap — “the basket is a floor: a minimum amount of loss that has to accumulate before a claim counts at all,” and “the cap is a ceiling: the maximum total amount recoverable, regardless of how large the actual loss turns out to be.” Neither concept has anything to do with a working-capital true-up: the true-up simply asks what the correct completion-accounts number is under the agreed accounting policy, with no floor or ceiling on the adjustment either way.
The practical consequence: a buyer who discovers, during the true-up process, a loss that looks more like a breach of a representation than an accounting-policy disagreement should ask whether it belongs in the indemnity process instead — the two clauses usually run on separate notice periods and separate decision-makers, and running the wrong kind of claim through the wrong clause can cost the time it takes to discover the mistake and start over under the right one.
In an illustrative scenario, the buyer's completion accounts showed a $180,000 downward adjustment to accounts receivable, based on the buyer's assessment that a group of aged invoices from a single customer were no longer collectible. The seller objected within the agreed window, arguing the target's historical practice had always carried these invoices at face value until actually written off, and that the buyer's more conservative treatment was not consistent with the agreed accounting policy.
The dispute was narrow enough to refer to a single named accounting firm as expert, with instructions limited to one question: what did the target's own historical bad-debt policy actually require for invoices of this age and this customer profile. The expert reviewed two years of the target's own write-off history, found no prior instance of a reserve applied this early, and determined that the $180,000 adjustment overstated the shortfall by $130,000 under the agreed policy. That determination was binding under the agreement's own terms — illustrating why the underlying policy definition, not the dollar figure either side opened with, decided the outcome.
Neither side's accountant was found to have acted in bad faith — both were applying reasonable professional judgment to a genuinely ambiguous instruction, which is the ordinary shape of a completion-accounts dispute. The lesson the buyer's counsel carried into the next deal was procedural rather than substantive: define collectibility, and every other judgment-dependent accounting term the completion accounts will turn on, in enough detail in the agreement itself that two competent accountants reading it independently would reach the same figure without needing a referral at all.
Generally no, if the purchase agreement makes expert determination the exclusive process for this type of dispute — Canadian courts typically hold commercial parties to a dispute-resolution clause they agreed to. Whether any carve-out exists depends entirely on how the specific agreement is drafted.
The agreement decides this, and approaches vary — some split the cost evenly regardless of outcome, others assign it to whichever side's position the expert rejects. It is worth settling in the clause itself rather than leaving it to be negotiated after a dispute has already started.
Most agreements deliberately make the determination final and binding with essentially no appeal, which is the trade-off for a faster and cheaper process than litigation. A buyer who wants a narrow right of challenge — for fraud or a clear departure from the expert's instructions, for example — has to negotiate that into the clause before signing.
A short call is enough to walk through the accounting-policy language before a dispute, not during one.
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