A range of options exists to resolve disputes over deals, says EUAN McSHERRY
Despite the difficulties of the past year it must also be said that not every business has fared badly during the pandemic, and indeed many have prospered, particularly those which were well placed to innovate and to provide services during the extended lockdown periods.
Some firms which were affected were already very strong, and large enough to withstand the economic headwinds.
However, thousands of smaller businesses, which in normal times were extremely successful, were unable to insulate themselves from the economic tsunami which washed over the country.
Given the unprecedented times, businesses are having to make difficult decisions on almost every aspect of their operation.
One of those key decisions may be whether to acquire another firm or even to sell the business.
An increase in M&A activity can be seen in figures from the ONS which show that in the three months to the end of September the value of deals in the UK rose to £4.4 billion, from just £400 million in the period April to June.
Whilst many transactions are successful, a number do not lead to the outcome parties had hoped for. In the life cycle of any M&A transaction, there are a multitude of potential bumps in the road, such as over-paying, or under-selling, legal or tax hurdles to overcome, cultural fit and funding challenges.
So what happens if an acquisition or an exit doesn’t go to plan? Ultimately it may lead to litigation and dispute resolution.
Litigation can certainly be complex and where a dispute arises it can be tempting to go straight for court action, and this of course does have its benefits. However, it also has its downsides.
Complexity is one, but there can, in some circumstances be a relatively high financial cost, potentially reducing any gains from the transaction.
It is important for all business owners and managers to know that other options do exist – many of which are less complex, less costly, have legal effect and, critically, can take less time.
Adjudication, arbitration, expert determination, mediation and negotiation are all such viable alternatives, any of which can be considered depending on the dispute in question.
They all encompass different approaches and attributes but what they have in common is that they offer a chance to have the dispute resolved by adjudication, without the normal issues arising through court action. Vitally, they can also be a path to maintain good relations between parties.
Whether you’re buying or selling, seeking professional advice at the outset is always best, but if problems do emerge, remember, disputes do not have to result in hostility.
It’s good to talk.
Euan McSherry is head of dispute resolution at Aberdein Considine