A Record-Breaking Year in M&A
The Consequences for Damages in Post-M&A Dispute Resolution in Arbitration
July 15, 2022
The global M&A market in 2021 was record breaking, with a total deal value estimated at USD 5.9 trillion. This was driven by an increase in individual deal values alongside an increase in deal volumes. As a result, in the first half of 2022 a wave of post-deal disputes has arisen in its wake. Increasingly, these disputes are being resolved through international arbitration. In this article, Heiko Ziehms and Anna Baird investigate the impact of this ‘white hot’ M&A market on the determination of damages when post-deal disputes arise. In particular, what is the correct counterfactual to use in post-M&A disputes? What is the impact when the price of a target differs from its underlying value? And why might this matter to those embarking on M&A transactions and their advisors?
This is an extract from Kluwer Arbitration Blog, first published in June 2022. The entire publication is available at: http://arbitrationblog.kluwerarbitration.com/2022/06/16/a-record-breaking-year-in-ma-the-consequences-for-damages-in-post-ma-dispute-resolution-in-arbitration/
“2021 was a record-breaking year for mergers and acquisitions (M&A). The total global deal value amounted to USD 5.9 trillion, an increase of 64% compared to 2020 and the highest ever recorded, driven by high valuations and fuelled by access to cheap financing. The market was strong across corporate and financial buyers. The year saw many auction processes, bidding wars, aborted deals and the increasing importance of special purpose acquisition companies (SPACs), which reportedly accounted for about 10% of global M&A volumes. While the M&A market declined in the first half of 2022, in part because of renewed disruptions caused by the COVID‑19 pandemic as well as the shocks to markets caused by the war in Ukraine, the recent surge in deal volumes, combined with exceptionally high valuations in 2021, have already led to a wave of post-deal disputes.”
This article was drafted in collaboration with Baird Forensic. Authors from Baird Forensic include:Anna Baird
Posted with permission from Kluwer Arbitration Blog. All rights reserved.
July 15, 2022
Senior Managing Director
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