Opinion ID: 202991
Heading Depth: 2
Heading Rank: 2

Heading: Calculation of PPA

Text: Perry also argues that the district court erred by calculating the PPA using a comparison date other than the closing date in contravention of both the PSA and the parties' expectations. Perry also asserts that the excluded cash and other assets were assets of the companies on the closing date, and therefore should be included in the net asset amount for purposes of calculating the PPA. We reject this challenge. The district court's asserted shift of the closing date to February 29, 2004, [8] for purposes of the calculation is not important. The real question is whether the calculation of the PPA should include the cash and other assets [9] to be retained by Perry after the sale as assets of the companies for purposes of determining the net assets at closing. The district court excluded these assets from the calculation. Whether this exclusion is characterized as doing the calculation at the date of ultimate distribution of the assets to Perry (instead of the actual closing date) or simply excluding these assets from the closing day assets because they were not assets of the companies (as they belonged to Perry) or whether these assets were deemed offset on the balance sheet by a liability to Perry is of no real consequence. The only issue is whether the decision to exclude the assets was proper. In the end, there is no dispute that the assets were intended to be distributed to Perry shortly after closing and would thus not inure to the benefit of the Wolavers. Further, because the PSA provided that the Wolavers were purchasing the assets belonging to the companies, and the disputed assets belonged to Perry, the district court was correct to exclude these assets from the PPA calculation. It would make no commercial sense for the Wolavers to purchase cash that they would never receive  particularly when they had arranged for a separate loan from Perry to provide working capital for the companies to replace the cash that was distributed. Moreover, Perry's position, if accepted, could lead to illogical results. For example, if all assets even technically possessed by the companies on the closing date were included in the calculation, the Wolavers would be charged for the value of Perry's personal vehicles parked on the premises at closing, even though Perry would be driving them away immediately thereafter. Similarly, Perry's argument that an apples to apples comparison would require excluding the cash from the December 31, 2003 balance sheet for the PPA calculation is also unpersuasive. As the district court noted, there is no indication that this was the parties' intent, and the PPA is specifically designed to account for such changes in the balance sheet between year-end and closing. We discern no error in the district court's calculation. [10]