Evidence and calculation of damages in business purchase agreements

Nobody really wants disputes in connection with corporate transactions (mergers & acquisitions). Due to the high purchase prices, however, disputes ranging from post-contractual discussions and renegotiations to litigation before a court or arbitration tribunal occur more frequently than expected.

Ten percent of all M&A transactions lead to contentious situations after the fact

Recent research shows that about ten percent of all transactions lead to renegotiation or become contentious in one form or another. Around two-thirds of the participants in a study on M&A disputes even expect an increase in disputes and renegotiations in the future. The background to this is that the current economic conditions and compliance regulations leave many market participants with no choice but to forego a purchase price (recovery) that is usually worth several million euros.

According to a long-term empirical value, the average purchase price reduction is in the order of 5-10%. In practice, however, purchase price adjustments of 50% and more do occur. As a result, the issue of post-M&A disputes is increasingly becoming the focus of companies, private equity funds, and legal and financial advisors. Even if disputes in the context of M&A transactions can be reduced, for example, through intensive due diligence and excellent legal advice during the negotiation of the purchase agreement, they cannot be prevented. - What can be done to avoid a dispute or if it does come to that?

Evidence in M&A disputes

Whether a plaintiff prevails in a legal dispute depends to a large extent on whether he or she can present and prove the facts on which the claim is based. Especially in complex M&A disputes, litigants often underestimate the difficulties associated with providing evidence. If the legal dispute, which has been conducted with the use of large personnel and financial resources, is lost after a lengthy procedure only because the (arbitration) court does not consider the relevant facts to be proven, the disappointment is great.