The issue revolves around the performance milestones established when Stillfront purchased Kixeye in 2019.

Swedish publisher Stillfront is the target of a new trial shareholders of Imperia online and War commander developer Kixeye, which is owned by Stillfront. Apparently, the motives for the prosecution stem from Acquisition of Kixeye by Stillfront in 2019, which reportedly stipulated that the developer would earn a bonus if any of their games hit specific sales milestones. Kixeye accuses Stillfront of manipulating financial reports in order to avoid paying such a bonus and sues for $ 30 million.

Such clauses are common in business mergers, and Hoeg Law attorney Richard Hoeg notes that this case looks like a “pretty standard earn-out battle.”

“It appears that when Kixeye was purchased, at least part of the purchase price was conditional,” Hoeg told GameDaily. “We generally call this a earn-out, in that you can ‘earn’ the remainder of your purchase price by performing well in the post-close period. The understanding being that if you don’t meet the agreed milestones then the lower price is correct, and if you do, then the higher price is.

The problem, however, is that once a business is sold, its owners do not have much control over whether or not they meet agreed milestones. For this reason, much of the pre-sale discussion centers on the terms to which the buyer will be bound.

“Sometimes there is language saying they will ‘do their best’ to help you hit them, sometimes they just say that they will not take any action to prevent it, and sometimes it is completely silent, this which generally gives the buyer maximum discretion, ”Hoeg explained.

In this case, Kixeye appears to be alleging that Stillfront manipulated its accounting data in such a way as to charge various expenses to the developer in order to prevent the achievement of established milestones. Proving this is at the heart of the Kixeye v. Stillfront case, and the language used in the original purchase agreement will undoubtedly play the key role in any future litigation.

Hoeg – who noted he practices U.S. law, not Swedish law – said Kixeye may have his work cut out for him, as cases like this tend to favor the buyer.

“The default rule is that the buyer can do whatever he wants within reasonable limits – and remembering that he has an overall good faith obligation in the terms of the contract in general – but if other restrictions were in place, the buyer could get in trouble for violating them, ”he explained.

In a statement to GamesIndustry, Stillfront made the following comment regarding the lawsuit:

“Unfortunately, we are unable to comment on an ongoing litigation or respond to specific allegations in articles. As we also communicated previously, Kixeye has not developed in line with the goals agreed upon in the deal. acquisition, therefore no additional purchase price was paid. “

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