M&A Disputes to Boom as Complex Deal Structures and Evolving Economic Conditions Define Soaring Market, New BRG Research Finds

Dealmakers, lawyers and private equity executives think M&A disputes will keep pace with surging deal market in 2022

BRG has released the results of its M&A Disputes Report 2021, which features quantitative and qualitative research providing an outlook on the global M&A disputes landscape. As the M&A market remained extremely strong in 2021 and is expected to stay that way into next year, the data delivers insight into factors driving an increase in disputes. Those factors include innovative deal structures, new investment vehicles, advances in technology and rapidly changing economic conditions.

BRG’s inaugural effort from 2020 focused specifically on the Asia–Pacific (APAC) region. This year’s report offers a global outlook, adding data and insights from Europe, the Middle East and Africa (EMEA) and North America, as well as APAC, and digs deeper into recurring themes while providing new questions and findings.

The report includes a quantitative survey of 225 lawyers, private equity professionals and corporate finance advisors, and features perspectives from more than 15 of the world’s top lawyers working in M&A, disputes and private equity. Outside contributors come from leading firms including Akin Gump, Wachtell, Lipton, Rosen & Katz and Latham & Watkins, to name a few.

Key takeaways from this year’s report include:

• The sectors most involved in disputes—hospitality & leisure, life sciences and technology—are the same across regions.
• Disputes often arise in complex cross-border deals triggering many jurisdictions; however, some markets, including China, South Korea and the US, are considered historically more litigious.
• The rise in special-purpose acquisition companies (SPACs) in M&A appears poised to lead to more disputes.
• Increased numbers of private equity deals are continuing to change the landscape of M&A, specifically in relation to how disputes arise and are litigated.
• Material adverse change (MAC) and material adverse effect (MAE) clauses are popular, though not overwhelmingly popular, ways to guard against post-close disputes.

The report looks at the new issues COVID has presented, resulting in potential disputes dealing with purchase price adjustments and earnout calculations. BRG’s research also examines another potentially powerful shift: MAC, MAE and force majeure clauses. Terms that were once simple boilerplate are receiving closer looks, and trends like third-party financial audits are becoming a bigger factor in how deals take shape.

“In a moment with increasingly complex M&A deals, the findings in this report make it abundantly clear that a multidisciplinary approach, built around understanding the fundamental issues at play and the root causes behind disputes, is crucial to get to the bottom of individual disputes,” said BRG Managing Director Mustafa Hadi.

Download a copy of the 2021 BRG M&A Disputes Report.