August 3, 2023
M&A Disputes: Survey Says Digital Assets & AI Likely Sources of Conflict
Berkeley Research Group recently published its Mid-Year M&A Disputes Report, which addresses emerging hotspots and assesses the broader global M&A disputes landscape. The report is the result of a survey of 162 leading M&A-focused lawyers, private equity professionals and corporate finance advisors around the world. This excerpt from the intro provides some of the key takeaways:
– Deals in digital assets and services are ripe for disputes as market volatility and proposed regulations disrupt cryptocurrency activity. Artificial intelligence (AI) is also an area to watch as generative AI technologies come to market.
– Environmental, social and governance (ESG) commitments are coming to the fore in disputes, driven by pressures from regulatory scrutiny and pushback against ESG-motivated decision-making which have heightened the need for due diligence around ESG in M&A transactions.
– The Asia-Pacific region has become a significant focus for both M&A dealmaking and disputes this year, just outpacing Europe, the Middle East and Africa as the geographic area most expected to drive increased dispute volume.
It’s not surprising that dealmakers think digital asset deals are ripe for potential disputes. The Report points out that M&A activity in the crypto space hit an all-time high in deal volume in the first quarter of 2023. That followed on a record-setting 2022 for crypto deals, but at the same time, the Report says that rising interest rates and the whole “crypto winter” thing led deal values to shrink by 64% in 2022, even as deal volume increased.
Now, I have it on good authority that when it comes to crypto, ‘fortune favors the brave”, but in an environment like this, the possibility that you just caught a falling knife can lead to a whole lot of buyer’s remorse.
– John Jenkins