CD: Could you provide an overview of M&A-related disputes over the past 12 to 18 months? What would you consider to be the dominant trends?

Theau-Laurent: In recent years, there has been a continued progression in the number of M&A-related disputes, specifically driven by sustained M&A activity in the context of growing economic and political uncertainty. Other factors, such as third-party funding and the increasingly regular inclusion of arbitration clauses in contracts, have further contributed to this growth. Conversely, higher quality information and the increased sophistication of parties should, in theory, have limited the occurrence of claims. Statistics show that disputes have arisen from deals of varying sizes, yet the bulk remains related to ‘mid-cap’ transactions with claims ranging from £10m to £100m. The majority of M&A disputes are still resolved through arbitration, as they frequently involve parties from different jurisdictions.

Berard: Many disputes still relate to the exaggerated financial performance and prospects of the target company. This includes the manipulation of the target’s accounting policies and assumptions to manipulate or distort the financial results presented to the acquirer – for example, granting unusual discounts or payment conditions to influence turnover, generating non-recurring income or expenses, making incorrect inventory or WIP valuations, and so on. In the last 18 months, we have seen a greater number of fraud-related allegations, sometimes with parallel regulatory and criminal proceedings.

Jul-Sep 2018 issue


Cadwalader, Wickersham & Taft LLP

Clifford Chance LLP

Freshfields Bruckhaus Deringer LLP

Norton Rose Fulbright LLP