What Is a Warranty Claim Expert Witness?
Definition
A warranty claim expert witness is a forensic accountant who provides independent expert evidence in disputes arising from mergers, acquisitions, and business sales in the United Kingdom, specifically where the financial position of the business at the time of the transaction is in dispute under an English law sale and purchase agreement.
What They Do
- Assess whether completion accounts were prepared on the agreed accounting basis as specified in the SPA
- Quantify the diminution in value caused by breach of financial warranties (the but-for valuation)
- Analyse whether earn-out targets were correctly calculated and whether the buyer's conduct affected them
- Identify and quantify locked box leakage: value extracted by the seller contrary to the agreement
- Review the accounting policies and their consistent application in the target company's accounts
- Produce CPR Part 35 compliant expert reports for High Court commercial or Chancery proceedings
- Act as independent expert determiner under SPA expert determination clauses
The Four Dispute Mechanisms
| Mechanism | What Is Disputed | Expert's Primary Role |
|---|---|---|
| Breach of warranty | Whether financial warranties were true | Quantify diminution in value |
| Completion accounts | How to prepare accounts at completion date | Apply agreed accounting basis |
| Earn-out | Whether targets were met; buyer's conduct | Model but-for earn-out position |
| Locked box | Whether seller extracted value post locked box date | Identify and quantify leakage |
Inspired Education v Crombie [2025]: What Went Wrong
In the 2025 SPA dispute before Mrs Justice Joanna Smith, the claimant's expert evidence was found to be 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.
This case is the clearest recent judicial statement on what warranty claim experts must avoid, and why independent, rigorous, well-instructed expert evidence is decisive in M&A disputes.
Expert Determination vs Court Proceedings
SPAs typically contain expert determination clauses for completion accounts disputes, with the ICAEW or Big Four firm appointing an independent accountant to make a binding determination. Warranty breach claims and earn-out disputes typically proceed to litigation or arbitration. The expert witness plays a different role in each context.
Instruct a Warranty Claim Expert Witness
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