Staff Reports
Stockholders in Cybermetrix Inc., a Columbus engine-testing firm, have been notified that the Indiana Court of Appeals has upheld a $3.1 million award to them over a dispute over the company’s sale through a stock purchase agreement.
Christine Mullholand sold Cybermetrix to SGS, a Swiss company that specializes in testing and verification services that was in expansion mode, finalizing the purchase on Feb. 12, 2016, court documents state.
CyberMetrix was one of five companies acquired by the Swiss conglomerate in 2016. Fifteen other firms were purchased in 2015. The Columbus-based engine testing and inspection company was founded by Mullholand, a former Cummins engineer, in 1992.
[sc:text-divider text-divider-title=”Story continues below gallery” ]Click here to purchase photos from this gallery
According to court documents, the sales agreement included selling the company for $21 million plus an additional contingency that Cybermetrix stockholders could receive additional money based on the company’s 2015 and 2016 earnings. Those would be calculated depending on whether Cybermextrix’s earnings exceeded certain amounts before interest, taxes, depreciation and amortization, according to court records.
While SGS did ascertain that the 2015 earnings did exceed $4.6 million and paid Cybermetrix stockholders $5 million, a second payment was not made, with SGS contending both year’s numbers did not meet the formula requirements, the court documents state.
Auditors from Ernst & Young were consulted to calculate what was owed, with their conclusion being that Cybermextrix stockholders were owed around $3.1 million for the second payment, according to court documents.
When SGS continued to decline to pay the second amount, Mullholand sought confirmation of the Ernst & Young decision in a Marion County court, which was granted, according to court records.
Citing an agreement that the two parties had agreed to arbitration, the court ruled SGS had to follow the auditor’s decision, according to court records.
The Indiana Court of Appeals upheld that decision, ruling that the two sides “clearly and intentionally agreed to arbitrate earnout disputes, and to do so through the designated auditor process.”
On Nov. 14, the Court of Appeals upheld the Marion County court’s decision and awarded judgement to Mullholand for $3,107,200.
