M&A risk management

There is really is no “one-size-fits-all” model for managing merger and acquisition (M&A) risk, but at the same time there is enough in common in most deals to allow for development of effective risk management in this area. The multi-step approach described in this White Paper is by no means the only way to manage your particular risk, but does represent one approach that can be adapted as necessary to form the basis of an effective M&A process for your organisation.

Unwieldy and complicated transactions

By their very nature, M&A transactions can be unwieldy and complicated. The numbers of people and functional areas involved seem to grow exponentially as transaction size increases, and each person or functional area brings a different viewpoint and agenda to the table.

The timeline is frequently aggressive and sometimes driven by considerations not within the control of the parties. The opportunities and risks are often sizeable and sometimes involve complicated cross-border elements.

To complicate matters even further, the term “M&A” covers a wide variety of transactions, from strategic equity or debt investments or small asset purchases all the way up to multibillion-pound acquisitions with worldwide impact. All of these factors create inherent risk in M&A transactions – clearly at a legal level, but also at a business level.

As with other risks, the best way to deal with this would be to devise a process that effectively manages M&A risk. But the unwieldy and complicated nature of M&A raises a fundamental question: is it feasible or even possible to devise such a process?

The good news is that, with proper foresight and planning, the answer to this question is clearly “yes”. Even with sophisticated outside legal counsel engaged, most of the burden of the day-to-day legal risk management effort in M&A transactions falls squarely on the shoulders of in-house counsel. With this in mind, this article lays out some considerations in the form of a multi-step approach that can readily be adapted to form the basis of an effective M&A process for your organisation.

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