Still Experts After Stillfront: Two Chancery Decisions Confine Independent Accountants to Accounting Disputes

M&A agreements routinely send disputes over earnouts and purchase-price adjustments to an independent accountant, and, as this blog has discussed before, the parties then fight over how much the accountant can decide. Earlier this year, in Fortis Advisors, LLC v. Stillfront Midco AB, 361 A.3d 43 (Del. 2026), the Delaware Supreme Court affirmed an order compelling a seller to bring its covenant and information-rights claims before an accountant that the merger agreement designated as an “Arbitrator.” See our coverage of that decision here.

Two recent Delaware Court of Chancery decisions indicate that Stillfront has not altered the treatment of the more typical accountant provision. In Georgia Security Solutions, LLC v. NewCBN, LLC, C.A. No. 2025-0798-JTL (Del. Ch. Aug. 3, 2026), and Cogent Infrastructure, LLC v. Sprint LLC, C.A. No. 2025-0486-PRW (Del. Ch. Aug. 11, 2026), the court held that the accountant provisions at issue called for expert determinations rather than arbitration, with the result that legal claims remained to be decided by a court. Georgia Security addressed the issue before the accountant had acted; Cogent addressed it after the accountant had ruled.

The Authority Test

The Delaware Supreme Court has held that whether a dispute-resolution provision calls for arbitration or expert determination depends on the scope of authority the parties conferred on the decisionmaker rather than the label they used. Applying that test in ArchKey Intermediate Holdings Inc. v. Mona, 302 A.3d 975 (Del. Ch. 2023), Vice Chancellor Laster described the standard accountant true-up as “a beefed-up expert determination, not a slimmed down legal arbitration,” and explained that parties seeking to convert that determination into an arbitration must do more than just refer to the accountant as an “arbitrator,” such as by designating a sponsoring arbitral organization and a set of arbitral rules.

Stillfront did not change that framework, which matters for the two recent decisions discussed below. The Delaware Supreme Court never decided whether the provision in Stillfront called for arbitration or expert determination. It treated the provision as an arbitration clause because the seller had conceded as much in the Court of Chancery, where the seller had, in the Delaware Supreme Court’s words, “emphatic that the parties agreed to submit the earnout dispute to arbitration.” The merger agreement was also unusual: if the buyer acted in bad faith to reduce the earnout, the seller was presumptively entitled to the maximum payment. The Delaware Supreme Court relied on that provision to hold that the bad-faith claim was for the arbitrator to resolve, because deciding whether the buyer acted in bad faith was part of deciding how much the seller was owed. As Georgia Security later observed, whether that reasoning “would have carried the day without the seller’s concession is an open question.”

Neither feature was present in Georgia Security or Cogent, both of which involved more typical accountant provisions. In Georgia Security, the question was whether the seller’s covenant and information-right claims had to be submitted to the accountant in the first place. In Cogent, it was whether the accountant’s completed rulings foreclosed the buyer’s claims for breach of representations and warranties.

Georgia Security Solutions: Covenant and Information-Right Claims Stay in Court

Background. The seller of a remote video-monitoring business (“Seller”) received, along with cash and rollover equity at closing, an earnout of up to $6 million if “Recurring Revenue” exceeded $2.6 million for the 2023 calendar year. The buyer (“Buyer”) agreed not to act with the intent or primary effect of preventing the earnout, and to use “commercially reasonable best efforts” to retain employees and preserve customer goodwill. Seller could demand records used to compute the payment or reasonably necessary to verify it. Unresolved disputes went to an independent accountant, whose determination was “deemed to be an arbitration award.” A separate provision limited the parties’ “sole recourse” for earnout disputes to the rights and remedies set out in the earnout provisions.

Seller alleged that Buyer took several steps that hurt the company’s ability to meet the Recurring Revenue goal — including freezing out the founder (who had roughly 80% of the customer relationships), installing inexperienced management and accounting personnel, and forgiving or deferring revenue. Buyer ultimately reported Recurring Revenue just short of the earnout threshold.

The motion to dismiss. Seller sued for breach of contract. Buyer moved to dismiss, arguing that the accountant procedure required Seller to take its claims to the accountant rather than to court. The court denied the motion. Applying the authority test, it held that the provision called for an expert determination, not an arbitration. The agreement named no arbitral rules or organization, contemplated no hearing, and confined the accountant to the range of the parties’ submissions. As the court put it, “an arbitration label does not change what the accountant was empowered to decide.”

The court then addressed what the accountant could decide. The agreement charged it with resolving “items of disagreement related to the Earnout Payment,” which the court read as limited to the revenue calculation itself and to terms “closely tied to the calculation task.” Whether Buyer breached its covenants, whether it complied with the information right, and which measurement period applied were legal questions for the court. Once the court resolved those questions, the accountant could apply the court’s rulings and run the numbers.

Buyer also argued that the “sole recourse” clause sent every earnout-related dispute to the accountant. The court disagreed. The clause limited the parties to the remedies set out in the earnout provisions; it did not make the accountant the exclusive forum. On Buyer’s reading, the covenants and information right would be “toothless,” because an accountant cannot order specific performance or award damages.

The court found Stillfront distinguishable on both of its distinctive features. Unlike the seller in Stillfront, Seller here had argued from the outset that the provision called for an expert determination. And unlike the Stillfront agreement, this agreement did not tie the amount of the earnout to whether Buyer breached its covenants, so the breach question was not part of the calculation assigned to the accountant.

Cogent: A Completed Determination Does Not Preclude Contract Claims

Background. The Cogent transaction had an unusual structure. Cogent paid a nominal base price of $1 for Sprint’s long-haul fiber network, and the final consideration was set through a post-closing purchase price adjustment. One component of that adjustment credited Cogent for half of the business’s short-term operating lease obligations (the “STOL”), so the more of the business’s obligations that qualified as “leases,” the lower the final price. The largest of those obligations was a 1991 service agreement (the “SUSA”) requiring annual payments above $50 million. Cogent treated the SUSA as a lease that qualified for the STOL credit. Sprint’s position was that the SUSA was not a lease at all, because it covered fiber that Sprint already owned — meaning no credit would apply. The parties submitted the dispute to the accounting firm named in the agreement (the “Accounting Firm”), which sided with Sprint and excluded $24,195,122 from the STOL.

Cogent then filed suit for fraudulent inducement, breach of representations and warranties, and indemnification. Cogent alleged that the agreement’s schedules had described the SUSA fiber as “leased,” listed the SUSA among the company’s rights-of-use arrangements, and left it off the schedule of material contracts. If Sprint owned the fiber, as it had argued to the Accounting Firm, those representations were false.

The motion to dismiss. Sprint moved to dismiss, arguing that the Accounting Firm’s determination was final and binding. Applying Terrell and ArchKey, the court disagreed. The provision let the Accounting Firm decide only whether the disputed items had been calculated according to the agreement’s definitions and accounting principles, and whether the math was right. That was an expert determination, one that “presupposes, rather than reexamines, the Agreement’s substantive terms.” Because the Accounting Firm had no authority to construe the representations, its ruling did not preclude claims that turned on them.

Sprint also pointed to a provision barring indemnification for amounts already reflected in the purchase price. Because Cogent had raised the SUSA during the adjustment process, Sprint argued the amount had been taken into account. The court read the provision as aimed at double recovery, which was not a risk here: the Accounting Firm had excluded the SUSA amount from the STOL adjustment, so Cogent received no purchase-price credit for that amount in the first place. Similar reasoning carried the day in Golden Rule Financial, which we covered in July. See our coverage here.

The court dismissed Cogent’s fraud claim as duplicative of its contract claims, but allowed the contract and indemnification claims to proceed.

Implications for Drafting

Labels do not control. Neither the “arbitration award” language in Georgia Security nor the “final and binding” language in Cogent was determinative. Parties who want the accountant to resolve covenant, information-right, or representation disputes must expressly confer that authority in the agreement. Naming arbitral rules and a sponsoring organization can signal an intent to confer broader, arbitration-like authority. Contractual language that makes resolution of the legal dispute necessary to the calculation the decisionmaker must perform may also support that result, although Georgia Security left open whether it does so absent a concession like the seller’s in Stillfront.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.