Value Disputes In M&A Arbitration

Value disputes in M&A deals are increasing, underlining the importance of due diligence. M&A arbitrations are becoming more litigious as well, fueled by the intensified personal liabilities of board members and managers. Their court-sanctioned duty to investigate all business matters potentially relevant to their business have left them scrambling to analyze transactions for purchase price recoveries. Damages in M&A arbitrations usually involve accounting, forensic or corporate finance, sometimes in addition to valuation issues. The objective of every damage assessment is to fully restore the injured party, but this principle must be adjusted depending on the jurisdiction and the underlying purchase agreement. The allegation that not all price-relevant information was provided during due diligence could lead to a situation in which the buyer claims to have been intentionally misled. In many jurisdictions, that claim enables the buyer to lever out contractually agreed liability limitations of the purchase agreement.