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In this weeks meeting, you will be negotiating the acquisition of Financial Liabilities, Human Capital, Price and Consideration Issues, and Escrow Issues. The audited and unaudited statements of income, cash flow, and shareholders equity for specified periods and as of specified dates (the Financials) have been prepared in accordance with generally accepted accounting principles (GAAP), or international financial reporting standards in some cases, consistently applied throughout the time periods indicated and consistent with each other. Do you agree with this outcome? Why Will Hassenfuss Electronics require key employees to agree to re-vest some of their vested options or rollover/invest some of their equity? Explain. Earnouts are complex to negotiate and tend to be the source of frequent post-closing disputes and sometimes litigation. If part of the consideration is an earnout, briefly describe how the earnout will work and the milestones to be met (such as revenues, EBIT, or EBITDA and over what period of time). If a portion of the consideration paid in the transaction consists of the buyers stock, your company and KP&T will need to agree on whether the escrow will be all cash, all stock, or some combination of both. Which do you think will serve your interests best and why? What about the interests of KP&T?

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