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.
Delaware Supreme Court Reinforces the Importance of Precision in Drafting ADR Provisions in Merger Agreements
In Fortis Advisors, LLC v. Stillfront Midco AB, No. 162, 2025 (Del. Feb. 13, 2026), the Delaware Supreme Court reaffirmed that Delaware courts will strictly enforce the dispute resolution framework chosen by the parties. The decision highlights the need to draft ADR provisions with precision—clearly identifying the decision-maker, the types of disputes to be delegated, and the scope of that delegation.
Sale of Buyer’s Equity Provides “Good Faith” Justification for Not Earning Earnout
As we have written about in the past, earnout provisions in M&A agreements are often ways to find value and bridge a buyer’s and seller’s differing expectations of the future. But they also are ripe for litigation, especially if the buyer changes the way the business is run or pursues other opportunities that may affect the earnout. Such disputes are highly fact-specific and often turn on the unique issues facing the acquired business. A recent case from the Delaware Court of Chancery illustrates an example of a buyer not having to pay an earnout when its conduct to not enter into new business with a potential customer was influenced by a simultaneous transaction to sell an equity stake in the buyer.
