In a sale transaction of 100% of a company owning two veterinary hospitals in the Community of Madrid, the transaction was structured with an initial price and a variable payment (earn-out) linked to the evolution of the business in subsequent years. The controversy arose when, after closing, it was questioned how the economic objectives that triggered these additional payments should be measured (and accredited).

In this context, martinsdelima was appointed to provide an independent expert opinion with a dual focus: on the one hand, to accurately reconstruct how the variable payment clauses should be interpreted and, on the other hand, to analyze the real and historical performance of the business and its expected evolution within a growing sector.

The key element of the case was that, after the acquisition, the buyer integrated the company into a corporate merger operation, with sharing and consolidation of income and expenses among different companies in the group. This integration altered the accounting traceability of the acquired business and generated a direct conflict over the possibility of verifying the earn-out milestones and, consequently, over the effective right to receive the variable payment.

To resolve it, we developed a solid methodology based on

(i) contractual analysis and reconstruction of relevant metrics (billing, cost structure, EBITDA and specific restrictions)

(ii) sector analysis and contrast with comparables

(iii) business valuation with triangulation of methods: Discounted Cash Flow (DCF), multiples of listed comparables (EV/EBITDA and EV/Sales) and previous transactions (specialized databases).

In the earn-out part, we carried out a technical verification of compliance with objectives based on the agreed conditions (including expense limits and calculation rules), showing how, under the applicable assumptions and metrics, the variable payment was quantifiable objectively and defensibly.

As a result, the report provided a solid quantification of the value of the business at the date of the transaction and a clear technical reading of the impact of the corporate integration on variable payments. In particular, the expert analysis determined a significantly higher equity value, also concluding that the price agreed in the contract was below market, reinforcing the client’s position with verifiable arguments that can be directly used in negotiation and/or contentious proceedings.