Post-completion M&A Disputes: Two Paths to Resolution

How parties are able to manage deal value and navigate disputes post-acquisition?

This article from GAR Middle Eastern and African Arbitration Review 2023 was first published in October 2023. The entire publication is available at: https://globalarbitrationreview.com/review/the-european-arbitration-review/2024/article/post-completion-ma-disputes-two-paths-resolution

We have recently observed several competing factors that have directly or indirectly influenced the management and protection of deal value following the completion of an M&A transaction. For instance, we have seen the effects of high borrowing costs, persistent inflation, political uncertainty and an energy crisis on deals and their valuations. Each of these elements individually—and certainly collectively—introduces additional challenges to successful transactions.

These challenges have made it more difficult for an acquired business to meet expected targets post-acquisition. This, in turn, means significant scope for disappointment. In many cases, acquisition targets have fallen short of the expected returns that had been priced into bids, especially in the industries most affected by the recent set of challenges. Similarly, sellers have been disappointed as a result of much lower-than-expected earn-out payments. Disappointment can breed disputes.

These circumstances have motivated the deal parties to increasingly consider ways to leverage dispute resolution mechanisms in the sale and purchase agreement, such as expert determination or arbitration clauses, or alternatively commence litigation. The article highlights considerations bearing on the choice between these mechanisms.

Reproduced with permission from Law Business Research Ltd.