Businesses constantly change, and have evolving needs. Situations always arise, where it is better to combine two existing companies than to start a new company from scratch. 

Mergers and acquisitions transactions are some of the most complex and consequential business activities. These transactions can lead to significant growth and market dominance. 

However, they’re also fraught with potential conflicts that can arise at various stages of the process. Addressing these disputes effectively is crucial to maintaining the integrity of the transaction and protecting the interests of all parties involved. 

Here are several ways to manage and resolve these disputes:

   One of the most important strategies for preventing and resolving disputes in M&A transactions is clear and detailed contract drafting. The  clearer and more precise the language, the less room there is for disagreement or misinterpretation.  

For example, earnout provisions should outline not only the performance targets but also the metrics for measuring those targets, the time-frame for achieving them, and any factors that could impact performance such as operational changes. This detailed approach helps minimize misunderstanding, reducing the likelihood of disputes later on. 

This is where the role of an attorney becomes essential. A skilled lawyer ensures that every term is carefully crafted to fit the specific needs of the transaction. They bring specialized knowledge of corporate law, which enables them to identify potential areas of conflict early in the process and propose effective solutions.

In some cases, particularly those involving complex financial issues, it can be helpful to involve a neutral third-party expert. 

For instance, if the dispute centers around a valuation disagreement or a working capital adjustment, a neutral financial expert can provide an independent assessment of the situation. This can help bridge the gap between the buyer and seller’s perspectives, leading to a resolution without the need for litigation.  Neutral experts can also be appointed during the dispute resolution process, such as in arbitration or mediation, to provide technical expertise and assist arbitrators or mediators in making informed decisions. 

The use of arbitration to resolve M&A disputes is common and appears to be increasing. Arbitration is often the preferred method for resolving conflicts related to share purchase agreements, shareholders agreements, and joint venture agreements which typically underpin M&A. 

In fact, these cases represent a significant portion of the caseload at the international court of Arbitration of the International Chamber of Commerce. For example, in 2012, M&A related arbitration accounted for approximately 16% of the total caseload (121 cases), compared to 17.7% in 2011 and 13.6% in 2010. This trend highlights the increasing reliance on arbitration as a flexible and effective way to resolve disputes in M&A transactions, ensuring that parties can reach a resolution without the need for lengthy and costly litigation in court. 

Addressing disputes in M&A transactions requires a comprehensive approach that includes clear contract drafting, and dialogue with your attorney. By being proactive and using the right dispute resolution mechanisms, businesses can minimize the impact of conflicts and ensure the success of their M&A transactions.