When an earn-out dispute surfaces after closing, the first ten days decide what evidence survives and who carries the burden of proof. Earn-out disputes after closing: what to do in the first ten days comes down to three steps: freeze the relevant accounting period, preserve the underlying management accounts, and put the counterparty on notice in writing before any informal call takes place.
Who this concerns
Three groups sit on either side of an earn-out dispute. The seller or founder owed a deferred payment tied to post-closing performance is the most exposed, because the business is now controlled by someone else and the seller has limited practical access to the numbers that decide the payment. The buyer, who now runs the target and prepares the earn-out calculation, is exposed in a different way: an aggressive or careless calculation invites a dispute that slows integration and locks up management time on a metric the buyer no longer cares about once the deal has closed.
A third group appears once the dispute hardens: management teams retained under the SPA to run the business during the earn-out period, whose incentives are frequently tied to the same metric, and any warranty and indemnity insurer that has to work out whether a shortfall reflects genuine commercial performance or a breach of a warranty given at signing. Where those two questions overlap, the dispute stops being a pure accounting exercise. A broader review of the firm's contracts and transactions work covers how that overlap is usually structured in the SPA.
The position also changes when the buyer's parent sits outside Sweden, or when the target's accounts, bank mandates or key customer contracts are held through a foreign subsidiary. Currency conversion dates for the earn-out metric, the governing law of the underlying commercial contracts feeding into the calculation, and access to management accounts held on a foreign group's finance system all raise questions that a purely domestic SPA does not.
What the law says
Swedish law has no dedicated statute for earn-out clauses. The mechanism is entirely a creature of the contract: the SPA sets out how the metric is calculated, who prepares the calculation, what access the seller has to the underlying books, and how a disagreement is resolved. Under Swedish law as it currently stands, a dispute over an earn-out calculation is treated as a contractual dispute about the interpretation and performance of that clause, governed by the general principles of the law of obligations rather than by any earn-out-specific provision.
Practice in this category of dispute is consistent on one point: an earn-out disagreement and a warranty claim are analysed separately unless the SPA expressly ties them together. A shortfall in the earn-out metric does not, by itself, prove that a warranty given at signing was breached, and a warranty breach does not automatically adjust the earn-out calculation. Where the drafting keeps the two mechanisms apart, as most SPAs do, a party that wants to run both arguments has to build two separate cases rather than one. For the warranty side of that split, see how warranty and indemnity claims are argued under current SPA drafting.
The general limitation period that applies to contractual claims under Swedish law also applies to an earn-out claim, unless the SPA sets a shorter contractual deadline for raising a dispute, which most earn-out clauses do. That contractual deadline, not the general limitation rule, is almost always the one that actually decides whether a claim survives, which is the reason the first ten days matter more than the general limitation position.
How it works in practice
The ten-day window is not a deadline created by statute. It is the practical window before the position hardens: before management accounts are closed for the next period, before informal conversations become the counterparty's version of events, and before any contractual notice deadline in the SPA starts running out unnoticed.
Day one: freeze the calculation period
Identify the exact accounting period the earn-out metric is measured against and stop any further adjustment to it. If the buyer controls the accounting system, request in writing that the relevant period be locked and that no further journal entries be posted to it without notice. This single action affects most of what can later be proven.
Day one to three: secure the underlying accounts
Collect every version of the management accounts, budget-to-actual reports and any calculation memo already circulated for the relevant period. Where the seller has audit or inspection rights under the SPA, this is the point to exercise them, not to negotiate about whether they are needed.
Day two: separate the accounting question from the legal one
Work out whether the dispute is actually about how a number was calculated, usually resolvable by an independent accountant under the SPA's expert mechanism, or about whether the buyer's conduct during the earn-out period breached an obligation to run the business in the ordinary course. The two questions are argued differently and are often decided by different people under the SPA.
Day three to five: draft and send the notice
Most SPAs require written notice of an earn-out dispute within a fixed period after the calculation is delivered, and set out a specific form for that notice. A notice that misses a required element, such as identifying the specific line items disputed, can be treated as no notice at all under the contract's own terms, regardless of how much correspondence surrounds it.
Day five to seven: trigger the SPA's dispute mechanism
Most earn-out clauses route a genuine calculation dispute to an independent expert or accountant appointed under a named professional body's rules, rather than to arbitration or the general courts. Where the SPA also carries a broader dispute clause covering several related agreements, the two mechanisms can conflict, a scenario worked through in the practice's review of multi-party, multi-contract dispute proceedings.
Day seven to ten: assess what the dispute is actually worth pursuing
Before escalating past the accounts and the notice, work out what proportion of the total consideration the disputed amount represents, whether the SPA caps earn-out dispute costs separately from general litigation costs, and whether pursuing the dispute risks the working relationship needed to run out the rest of the earn-out period productively.
What to check
- The exact deadline in the SPA for raising an earn-out dispute, measured from delivery of the calculation, not from when the shortfall was discovered.
- Whether the notice clause requires a specific form, specific line items, or delivery to a named person or address.
- Whether the SPA gives audit or inspection rights, and whether those rights lapse if not exercised within a set window.
- Whether the dispute resolution clause for the earn-out is the same as the general dispute clause in the SPA, or a separate expert-determination mechanism.
- Whether any warranty claim is time-barred separately from the earn-out claim, since the two deadlines rarely align.
- Whether the earn-out payment, if disputed, is treated as deferred consideration or as a separate obligation for purposes of any security or guarantee in the SPA.
Can an earn-out dispute be pushed into arbitration under a wider dispute clause covering several related agreements?
It depends on how the SPA and any related agreements define the scope of the arbitration clause. Where an earn-out sits in one agreement and a separate services or transition agreement sits in another, a multi-party dispute forces an early decision on whether both go to the same forum, a question worked through in the review of multi-party and multi-contract dispute proceedings referenced above.
Does a shortfall in the earn-out also support a warranty or indemnity claim?
Only if the SPA links the two mechanisms, or if the shortfall is caused by conduct that independently breaches a warranty given at signing, such as a warranty about the accuracy of historic accounts used to set the earn-out target. Otherwise the two claims are argued and time-barred separately, under their own notice deadlines.
Can a disputed earn-out adjustment amount to an unlawful transfer of value out of the target company?
It can, if the mechanism used to reduce or avoid the payment routes value out of the target in a way that falls outside an arm's length calculation, particularly where the buyer also controls the target during the earn-out period. That risk is distinct from the contractual dispute and is addressed separately as an unlawful value transfer, olovlig värdeöverföring, under Swedish company law, explained in the glossary entry on unlawful value transfers.
The numbers
There is no fixed figure that describes how long an earn-out dispute takes or what it costs, because both depend entirely on what the SPA and the underlying accounts actually say rather than on any statutory timetable. What is fixed, and worth treating as fixed, is the ten-day window before the seller's position gets harder to rebuild: before that point, the seller can still request that the calculation period be frozen and the accounts preserved; after it, the seller is arguing from documents the buyer already controls and has had time to annotate.
Cost is driven by three factors rather than by the size of the disputed amount. The first is whether the dispute stays within the SPA's own expert-determination mechanism or spills into a broader arbitration or court proceeding, usually the largest single driver of cost. The second is whether a forensic accountant is needed to reconstruct the calculation from source data rather than from the summary numbers already circulated, which becomes necessary whenever the underlying management accounts were prepared by the buyer's own team rather than by an independent finance function retained from before closing. The third is whether the dispute has to run in parallel with a warranty claim under a separate deadline, which effectively doubles the drafting and evidence-gathering work even where the underlying facts overlap.
None of this is quantified here because the figure that matters is set by the SPA in front of you, not by a market average. A document that names a deadline, a cap, or a specific expert-appointment mechanism controls over any general expectation about how these disputes usually run.
Where it usually goes wrong
The ten-day playbook above assumes the earn-out clause is drafted the way most are: a calculation delivered by the buyer, a notice period for the seller to dispute it, and an expert-determination fallback. Three situations sit outside that assumption.
The first is where the earn-out has already been paid in full and the dispute is really about a clawback or set-off the buyer is asserting against a later instalment or against an escrow. That is not a calculation dispute; it is closer to a warranty or indemnity claim wearing the language of an earn-out, and it is argued on the warranty and indemnity track rather than the earn-out track described here.
The second is where the SPA's dispute clause for the earn-out is actually a general arbitration clause covering every dispute under the agreement, including disputes about entirely unrelated warranties or indemnities. Sending a narrow earn-out notice under the wrong clause, or to the wrong forum, can be treated by the counterparty as a defective notice and used to argue the deadline has lapsed.
The third is where the earn-out claim is secured, in whole or in part, by a pledge over shares in the target or by a charge over real property held by the target company. Before assuming that security is available if the dispute is lost informally, check what is actually registered against that property: encumbrances that were never perfected, or that rank behind an existing charge, are common and are explained in the review of how title encumbrances are recorded in the land register.
Taking an action inconsistent with disputing the calculation, such as accepting a partial payment without a reservation of rights, or continuing to invoice the buyer under a separate transition services agreement without raising the earn-out issue, can be read as acceptance of the buyer's figure. Where the ten-day window has already passed and no notice has gone out, the practical question is no longer what the SPA's notice clause requires, but whether conduct since then has already answered the dispute either way.
What to do next
The steps above resolve the record-keeping side of an earn-out dispute: what gets frozen, what gets requested, and what a compliant notice looks like. They do not resolve the underlying accounting or legal question, which turns on reading the actual SPA clause, the calculation delivered, and the notice already sent, against each other.
That is the point at which self-directed work reaches its limit. Lodline reviews the SPA's earn-out mechanism together with the calculation and any notice already exchanged, and sets out where the position stands and what the realistic routes forward are, starting with an assessment call. Where the same transaction also carries a supply, IT or SaaS agreement feeding into the target's numbers, a comparable fixed-scope review is available for IT and SaaS agreements from a Swedish customer's side, run to the same format.