Thursday, July 31, 2008

'Disputes relating to facts are settled upon establishment of facts'

Delay and dispute in M&A deals

Mergers and acquisitions (M&As) are slowly turning out to be painfully long, and most of the times burdened with disputes in one form or the other. Let's first take a local example: After negotiations stretching over 50 days, Reliance Communications and South Africa's MTN Group ended talks that could have seen a potential telecom powerhouse emerge. Even as the media and analysts try and discover the corporate `whodunit' behind it all, many are left to wonder what happened to the times of deals such as Ranbaxy-Daiichi or even Hindalco-Novelis, which sailed through in comparison....
What seems to be the problem in these potential deals? "Recent experiences in more mature M&A markets (mainly continental Europe and the US) show that transactions concluded in these geographies either go through a lengthy negotiation process or a formal dispute resolution process with respect to purchase price after the deal has been signed," says Mr Srikant Krishnan, Partner, Ernst & Young.

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