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Companies warned on hurried deals

Companies face losing millions if they rush into deals, say KPMG forensic accountants.

The current economic climate means there is more pressure on companies negotiating deals to get the best price.

But if issues, such as the price adjustment mechanism and the preparation of completion accounts, are not dealt with properly before completing deals, companies could face costly post-completion disputes, says KPMG.

Ivan Seery, director of KPMG forensic accounting, said: ‘The completion accounts mechanism has frequetnly been used retrospectively as a means to re-negotiate the price of a deal. Sellers and buyers both need to pay greater attention to the detail; they must ensure that the price adjustment mechanism is not overlooked in the rush to “get the deal done”.’

Seery has urged negotiators to check all accounting aspects in addition to the due diligence work.

Problem areas include inadequate access rights to perform accounts’ reviews, compliance of completion accounts with national requirements and the diverse price adjustment mechanism for cash, debt and working capital.

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