As mergers and acquisitions rebound, deal-related disputes are rising, adding financial and legal complexities for CFOs. A recent BRG report highlights how economic volatility, geopolitical risks, and regulatory scrutiny are fueling post-deal conflicts. Taking a proactive approach may help CFOs safeguard financial interests and reduce risks. One major challenge is the misalignment of financial expectations in uncertain markets. Fluctuating interest rates, shifting valuations, and unpredictable performance make deal structuring more difficult. Nearly one-third of BRG’s survey respondents expect earnout provisions used to bridge valuation gaps to be a key source of disputes. Clearly defining these terms and supporting them with solid financial models may help reduce conflicts. Furthermore, ensuring transparency in financial reporting can smooth negotiations and prevent disputes from escalating. Regulatory hurdles are another growing concern, particularly in Europe, the Middle East, and Africa (EMEA), where stricter oversight has led to more disputes. Antitrust concerns and developing compliance requirements continue to delay deals and, in some cases, trigger legal challenges.
Collaborating with legal teams early may help CFOs anticipate and address regulatory roadblocks before they become costly issues. Private equity (PE) firms, which play a significant role in M&A, are also becoming more assertive in enforcing contract terms. While PE firms conduct extensive due diligence, they are increasingly willing to litigate post-deal disputes. CFOs may benefit from carefully assessing risk allocation and ensuring financial contingencies are in place to manage potential conflicts. The financial sector has seen the sharpest rise in M&A disputes, partly due to the lingering effects of the 2023 banking crisis. Strengthening risk management frameworks and maintaining clear financial reporting could help mitigate these risks. BRG advises CFOs to incorporate dispute mitigation strategies early in the deal process. Enhancing due diligence, refining contract terms, and staying ahead of regulatory changes can help protect the deal value and ensure smoother transactions.
