Increased complexity in the dealmaking process and more intense regulatory scrutiny have led to a spike in the proportion of deals that end up falling apart, and legal advisers who can come up with novel solutions for these issues are in demand from companies that want their mergers to succeed.
The proportion of failed M&A deals has gone up in each of the last three years and reached an eight-year high in 2016, according to a report released this month by cloud computing company IntraLinks Holdings Inc. and London’s Cass Business School. According to the report, 7.2 percent of M&A transactions announced last year, which includes both public and private deals, never got completed — that’s the highest rate of worldwide deal failures since the start of the global financial crisis in 2008.
“It’s best to be ready with potential solutions to issues a regulatory body might raise,” said Howard Berkower, a partner with McCarter & English LLP’s corporate practice. “Being prepared is just really important. There can be a lot of thorny regulatory issues in both the U.S. and other jurisdictions.”