Frequently Asked Questions

A warranty claim expert witness is a forensic accountant who provides independent expert evidence in disputes arising from mergers, acquisitions, and business sales. They quantify financial losses from warranty breaches, analyse completion accounts disputes, model earn-out disagreements, and identify locked box leakage.

The four main types are: breach of warranty claims (where financial warranties were untrue), completion accounts disputes (where parties disagree on the financial position at completion), earn-out disputes (where earn-out targets were not met or were calculated incorrectly), and locked box disputes (where the seller allegedly extracted value after the locked box date).

The claimant's valuation expert evidence was fatally undermined by three failures: instructions not consistent with commonly used definitions of market value, lack of rigour in approach to the evidence, and a somewhat partial approach, particularly in relation to sources relied on in the report.

The agreed accounting basis is the accounting framework specified in the SPA for preparing completion accounts, typically "in accordance with the accounting policies of the target company as applied in the reference accounts." The expert assesses whether each item was prepared consistently with those specific policies.

Diminution in value is calculated by establishing the warranted financial position (what the accounts showed), establishing the true financial position (what the accounts should have shown), valuing the business under each scenario, and calculating the difference.

ICAEW expert determination is a contractual dispute resolution process where the ICAEW appoints an independent accountant to make a binding determination on completion accounts disputes. Each party submits written representations and the determiner issues a binding decision.

W&I insurance has not eliminated warranty claim disputes. It has changed who brings them. Insurers often fund and drive litigation through subrogation rights against the seller. The forensic accountant's role remains the same, but insurers typically conduct more rigorous expert evidence scrutiny.

SPA earn-out provisions typically require the buyer to maintain consistent accounting policies during the earn-out period. Where the buyer changes policies to reduce reported earn-out metrics, the expert must restate the metrics on a consistent basis and quantify the impact.

Leakage is value extracted from the target by the seller or related parties between the locked box date and completion, contrary to the leakage provisions in the SPA. It can include dividends, management fees, payments to related parties, and asset transfers not in the ordinary course of business.

Indicative rates range from £300 to £500 per hour for standard M&A disputes, £500 to £800 per hour for complex High Court proceedings, and £700 to £1,200+ per hour for Big 4-level experts on major deals. Report costs typically range from £8,000 to £100,000+ depending on complexity.

Instruct as early as possible. SPA limitation periods for warranty claims are typically 12 to 24 months from completion. Early instruction allows the expert to assess the claim, advise on strategy, and produce evidence before deadlines expire.

Core credentials include ACA/FCA (ICAEW), ICAEW Forensic Accreditation, M&A transaction experience, CPR Part 35 expert report history, and prior court acceptance in warranty and M&A dispute contexts.