M&A Dispute Volume Is Rising in Climate of Economic Uncertainty and Geopolitical Upheaval

M&A disputes forecast to increase in 2023 amid geopolitical and macroeconomic disruptions

Mergers and acquisitions disputes accelerated in 2022 even as deal activity slowed, with the darkening economic outlook expected to fuel further disagreements over deals in the coming year, according to BRG’s M&A Disputes Report, released today. Now in its third year, the report examines the global M&A disputes landscape and features qualitative and quantitative research from some of the world’s leading deal and disputes experts. The latest survey found that macroeconomic concerns are surpassing COVID-19 disruptions as primary dispute catalysts, a trend that dealmakers, lawyers and private equity executives expect to extend into 2023.

Continuing last year’s global scope, the 2022 report examines M&A dispute activity and insights from the Europe, Middle East and Africa (EMEA), North America and Asia–Pacific (APAC) regions, investigating recurring themes while posing additional questions and revealing new trends as the pandemic’s effects begin to subside.

The report draws from a quantitative survey of 181 lawyers, private equity professionals and corporate finance advisors, with additional perspectives from more than 20 of the world’s top lawyers and experts working in M&A, disputes and private equity. Outside contributors come from leading firms including Quinn Emanuel Urquhart & Sullivan, Jones Day, Hogan Lovells and Linklaters.

Key takeaways include:

• The dispute pace likely will pick up in the coming year amid continued market volatility due to concerns over inflation and a possible recession, as well as geopolitical uncertainty and lingering effects of COVID-19.

• Financial Technology (FinTech), Energy & Climate and Traditional Financial Services are the top-ranked sectors for increased dispute activity in 2022. Respondents expect the Construction & Real Estate sector to take the lead in 2023.

• Environmental, social and governance (ESG) disputes are brewing as regulations take shape and businesses strive to meet evolving, multifaceted ESG criteria.

• EMEA is the region expected to drive dispute activity in the coming year, with strict regulatory regimes and political strife seen as significant disruptive factors.

The report examines how rising concerns around the volatility of markets and political upheaval are influencing M&A deals and dispute behavior. BRG’s research found that the dramatic events of the past year—including the energy crisis in Europe and elsewhere, falling stock prices and real-estate market disruptions—have shifted the sectors experiencing the most disputes compared to 2021, when COVID-19’s effects heavily impacted hospitality, life sciences and technology. The report also tracks steps that lawyers and advisors are recommending to reduce the likelihood of disputes, such as a greater emphasis on conducting enhanced due diligence while deemphasizing material adverse change and material adverse effect clauses for sellers.

“With geopolitical tensions, macroeconomic concerns and lingering COVID-19 disruptions impacting increasingly complex M&A deals, this report emphasizes the need for a clear understanding of the fundamental issues driving disputes. A multidisciplinary approach will be required to address these challenges effectively,” said BRG Managing Director Mustafa Hadi. “The data and expert analysis collected within the 2022 report offer deep insights on the volatility and uncertainty that will drive disputes in the months ahead.”

Download a copy of BRG’s M&A Disputes Report 2022.