After a four-day arbitration hearing in January 2021, we successfully defeated a $6 million claim in an earnout dispute brought by the sellers of a commercial blind and shade business. Our client, a major manufacturer of custom window treatments, purchased the claimant’s business in 2015 subject to a Purchase and Sale Agreement that included, as a portion of the purchase price, a three-year earnout. The claimant alleged that our client miscalculated the third year’s earnout and also made operational changes that triggered the earnout protections in the Agreement and required our client to pay the maximum earnout.
The panel rejected the claim that our client breached the Agreement and triggered the earnout protections and adopted our legal and factual theories. With respect to the calculation of the earnout, the panel ruled that our client’s calculation was correct subject only to two small adjustments (the majority of which were conceded before the hearing). The award represented only a tiny fraction of the amounts sought by claimant and constituted a significant victory for our client.