Earn-out disputes after closing: cost and likely outcome hinge on three factors: who controls the post-closing accounts, how precisely the agreement defines the earn-out metric, and whether the dispute goes to arbitration or the general courts. Cost tracks the volume of financial detail under review, not the length of submissions; the party with clean documentation typically holds the stronger position.
Who this concerns
The situation arises whenever part of the purchase price for a Swedish target was made contingent on performance after closing: revenue, EBITDA, a client retention threshold, or a specific operational milestone. It concerns sellers who no longer control the business they are being measured against, buyers who now run a company they did not fully price at signing, and management teams whose retention bonuses sit on top of the same numbers.
Private equity sellers see this most often, because an earn-out closes a gap between asking price and buyer risk appetite; the dispute tends to surface once the first or second measurement period closes and the actual figure falls short of what the seller expected. Strategic buyers see the mirror image: they integrated the target faster than the agreement anticipated, changed a reporting line, or moved a shared function into the parent, and the seller argues the change depressed the metric on purpose.
Where the buyer, the buyer's parent company, or a material part of the target's assets sit outside Sweden, the dispute changes shape before it starts. The agreement's governing law may still be Swedish while the entity that actually controls the accounts sits in another jurisdiction, so document production, witness availability, and eventual enforcement all run through a second legal system. A seller who wins on the merits but cannot reach the paying entity's assets without a separate recognition procedure for a foreign award has not actually won yet.
What the law says
Under Swedish law as it currently stands, an earn-out obligation is not a separately regulated instrument. It is an ordinary contractual payment obligation, and a tribunal or court reads it the way it reads any other price term: starting with the wording the parties chose, then the systematic context within the agreement, then the commercial purpose the clause was evidently meant to serve if the wording leaves room for more than one reading.
That has a practical consequence sellers underestimate. A clause that says the metric will be calculated "in accordance with the company's accounting principles" without freezing which principles, as of which date, invites a buyer to change a principle post-closing and argue the new one still fits the words. The same drafting discipline that keeps an IT or SaaS agreement's service metric enforceable applies here: the metric has to be defined precisely enough that a third-party accountant could recalculate it without asking either side what they meant.
Dispute resolution clauses in Swedish share purchase agreements route earn-out disagreements to arbitration seated in Sweden more often than to the general courts, mainly for confidentiality and speed. Where the agreement is silent, the general courts take jurisdiction based on the seller's domicile or the target's registered seat. Neither route changes the substantive test: the claimant carries the burden of showing what the metric should have been and why the buyer's calculation departed from the agreed method.
How it works in practice
How the dispute usually starts
It rarely starts with a claim letter. It starts with a delayed earn-out statement, a statement that arrives with a footnote changing a previously used accounting line, or a request to move the measurement period because of an acquisition the buyer made in the interim. The seller's first move is almost always informal: a request for the ledger detail behind the statement, not a formal objection.
Who controls the post-closing accounts
This single fact predicts most of the outcome. If the agreement gives the seller, or a seller-nominated director, a genuine information right over the relevant business unit during the earn-out period, disputes tend to settle on the numbers because both sides are looking at the same ledger. Where the buyer has full, unreviewed control and the seller only a right to object after the fact, the dispute becomes a fight about access before it becomes a fight about the metric itself.
The role of an independent expert or accountant
Most agreements with earn-outs provide for an independent accountant to resolve a disagreement over the calculation, acting as an expert rather than an arbitrator, which limits what can later be reviewed. The mandate is drafted narrowly on purpose: what questions the expert answers, whether the expert can look beyond the accounts to the underlying business decisions, and whether the determination is final or merely evidentiary in a later arbitration. A mandate limited to "the correct figure" leaves the real fight, whether a post-closing decision was made in good faith, for a tribunal to decide.
Arbitration versus the general courts
Arbitration reaches a final, enforceable determination faster and keeps the dispute out of the public record, which matters to a seller still selling to other buyers in the same sector. It costs more per hour of work than the general courts and leaves less room for interim measures against a buyer dissipating the target's assets. A claim run through the courts is slower but carries the possibility of interim attachment, which matters where the paying entity's solvency is in question.
Building the evidentiary record
The record that decides these disputes is accounting detail, not correspondence. Management accounts for the periods around closing, the ledger entries behind any line the buyer changed, board minutes recording an operational change, and the underlying customer or production data the metric was meant to track. Correspondence matters mainly to fix the date a party knew, or should have known, that the calculation was disputed, because most agreements set a notice deadline running from that date.
Where physical assets sit inside the metric
Where the earn-out tracks output from a physical operation rather than a pure revenue line, the condition of the underlying assets at closing often becomes a fact issue of its own, closer to a technical inspection dispute than a pure accounting one. The same logic applies to asset-heavy targets carrying real estate or infrastructure rights: a metric depending on rights the buyer only partially controls, in the way a land access arrangement does, is harder to police than one resting purely on a P&L line.
What to check before instructing counsel
- The exact wording of the metric and whether it names a fixed accounting policy or a moving reference
- Whether the agreement freezes accounting principles as of closing, or lets the buyer's ordinary policy changes flow through
- The information rights clause: what the seller can demand, and by when, during the earn-out period
- The notice deadline starting the clock on a formal dispute, and whether it has already run
- Whether an independent expert mechanism exists, and exactly what it is mandated to decide
- The seat and rules of the dispute clause, and whether the paying entity's assets sit within that forum's reach
Can an earn-out dispute be resolved without going to arbitration or court?
Yes, and most are. An independent accountant mechanism, where the agreement provides one, resolves the calculation without either party filing a claim. Where no such mechanism exists, or the disagreement extends to whether the buyer acted in good faith, settlement talks backed by a credible willingness to file usually close the matter once both sides have exchanged the underlying accounting detail.
Does a change to accounting policy after closing affect the earn-out calculation?
It can, and this is the most common source of disputes. If the agreement does not freeze the accounting principles used to calculate the metric as of closing, a buyer's ordinary, otherwise legitimate policy change can lower the figure without technically breaching the wording. Whether the change is permissible depends on how the metric definition was drafted, not on general fairness.
Who pays for the independent expert if the parties disagree on the figure?
The agreement usually allocates this cost either equally, or according to how far each side's position departed from the expert's final determination, with the losing party bearing a larger share. Where the agreement is silent, the parties typically split the fee regardless of outcome, which is worth checking before the mechanism is triggered.
The numbers
No two earn-out disputes cost the same, and what actually moves cost is qualitative rather than a fixed tariff:
- Number of financial years under review. A dispute over one measurement period costs a fraction of one covering several years of restated accounts.
- Whether a forensic or independent accountant is engaged. Usually the largest line item once a dispute moves past correspondence, scaling with contested ledger entries rather than claim size.
- Single metric versus a composite formula. A dispute over one revenue line is contained; a formula combining revenue, margin, and retention multiplies the facts that must be tested.
- Arbitration seat and rules chosen in the agreement. Institutional arbitration carries administrative fees on top of counsel time; ad hoc arbitration or the courts do not, but take longer to reach a final determination.
- Volume of disclosure the buyer controls. Where the buyer resists producing ledger detail, the early stage becomes a document production fight before the calculation is even addressed.
- Cross-border enforcement. A claim against a paying entity outside Sweden adds a distinct enforcement stage after any determination on the merits.
Where it usually goes wrong
The most common failure is treating the earn-out clause as settled at signing and not revisiting it once integration planning starts. A seller who does not insist on a genuine information right during negotiation has no practical way to test the buyer's calculation later, whatever the agreement says about disputing it.
The second is missing the notice deadline. Most agreements give the seller a fixed window to object once a statement is delivered; a seller who negotiates informally past that window before sending a formal objection can lose the right to dispute the figure at all, regardless of how wrong it turns out to be.
The third is assuming the expert mechanism covers more than it does. Where the mandate is limited to recalculating a defined figure, a seller who wants to argue the buyer restructured the business in bad faith has picked the wrong forum; that argument belongs in arbitration or the general courts, not in front of an accountant with a narrow mandate.
The fourth applies specifically to cross-border structures: a determination against a foreign buyer or parent is not the end of the matter. Recognising and enforcing it against assets held outside Sweden is a separate procedural step, with its own grounds for challenge, and the paying entity's structure often makes that step harder than the underlying dispute.
Finally, a dispute that is really about the buyer's post-closing management decisions, not the accounts, rarely resolves through the expert mechanism at all. Where the seller's real complaint is that the buyer changed the business, the expert route produces a technically correct number for the wrong business.
What to do next
This is the point where the analysis stops and the documents start. Reading the metric definition, the notice clause, and the information rights clause side by side against what actually happened after closing is not something that can be done reliably from the outside, and it is exactly the review that determines whether a claim is worth pursuing.
The starting document is usually the share purchase agreement's price mechanism itself: how the metric was drafted, and whether it was drafted tightly enough to survive the change the buyer made. Where the review shows a real dispute rather than a drafting gap that closes off the claim, the next step is arranging a case assessment before a notice deadline runs, not after.