Litigation risk is a mounting problem for businesses pursuing cross-border M&A, with almost three-quarters of companies questioned for Herbert Smith Freehills’ new cross-border M&A report Beyond Borders warning that risk is set to increase.
Carried out in association with FT Remark, the research division of the FT, the report canvasses the opinions of 700 senior executives at major businesses around the globe on their experiences of cross-border M&A and their views on the outlook for M&A activity over the next three years. The original survey was conducted at the end of 2015 but, in order to capture any change in sentiment due to the market downturn in early 2016, the report also includes a second study of a significant cross section of the same respondents, providing a comprehensive review of the current M&A landscape.
Some highlights from the report relating to legal and regulatory challenges include:
- Almost three quarters (73%) of respondents expect overall litigation risk to increase in the years ahead. Seventeen percent of respondents said they were significantly less likely to pursue deals because of litigation risk.
- Legal/regulatory factors have been the most challenging aspects of deals done by respondents in the past two years.
- Anti-trust and labour and employment regulations were the most common causes of deal failure. Almost half of those surveyed are most concerned by anti-trust regulations when doing deals in North America.
- Environmental issues are also seen as a key regulatory deal-breaker.
- Legal challenges are region specific. In EMEA, labour and employment regulation was the biggest issue for acquirers. In Asia-Pacific, almost a quarter stated that environmental regulations caused deal failure.
To download the full report please visit www.hsfbeyondborders.com.