Experteq – formerly Transaction Solutions – has been ordered to pay Expert Group International $9.7 million, plus interest, in a final settlement of a contested earn out provision following the 2020 takeover of Expert Group by TAS.
Transaction Solutions has since changed its name to Experteq, which was the trading name of the vendor.
Experteq is a trusted supplier of managed services, such as cloud computing, to mutual banks and credit unions, as well as clients in other sectors.
The business changed hands in mid 2020 for an upfront payment of $2 million plus additional payments (subject to a formula in the contract), but with the total payment capped at $20 million.
By 2021, TAS/Experteq was seeking to renegotiate the earn-out. This finally occurred in April 2022.
By late 2022 the purchaser and vendor were in dispute over the earn-out liability.
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In March 2023, the vendor commenced proceedings in the Supreme Court of NSW, seeking declarations as to the proper construction of the Share Sale Agreement.
By June 2023 the parties had accepted the appointment, via the Resolution Institute, of forensic accountant Paul Croft as ‘earn out expert’, consistent with their contract.
On 22 September 2023, Croft issued his determination, concluding that the amount of the second additional payment was $9,663,200 and that the purchaser did not have a reasonable basis for disputing the Earn Out Notice.
“Of most significance, in terms of monetary value, the expert agreed with the vendor as to how the earn-out formula operated” Justice Kelly Rees wrote in her judgement on this matter on Tuesday.
Nevertheless, the purchaser contested the expert’s finding, which were said to include five manifest errors – arguments the court did not accept.