M&A Disputes UK: Causes, Prevention & Resolution
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Mergers and acquisitions can reshape a business overnight, but they can also open the door to disagreements that linger long after the ink has dried. When two companies combine, expectations clash, warranties get tested, and the numbers don't always tell the full story.
Post-completion disputes are one of the less glamorous sides of deal-making, yet they are common enough that every buyer and seller should understand the ground rules. This page walks through the typical flashpoints in UK M&A disputes, what parties can do before signing to reduce their exposure, and the routes available when a disagreement does surface.
Whether you are planning a sale, buying into a competitor, or dealing with fallout from a recent transaction, knowing where these disputes come from is the first step in handling them sensibly. The aim here is to give you a clear, plain-English overview rather than legal advice on your particular deal.
Overview
An M&A dispute is any disagreement that arises between the parties to a merger or acquisition, either during negotiations or, more commonly, after completion. In the UK, these disputes usually centre on the share purchase agreement (SPA) or asset purchase agreement and the promises made within it.
Typical flashpoints include breaches of warranty, disputes over completion accounts or earn-out calculations, claims under tax covenants, alleged misrepresentation during due diligence, and arguments about restrictive covenants given by sellers. They can also arise between shareholders within the combined entity, between management and new owners, or with third parties such as key customers, suppliers, or regulators who react to the change of control.
Some disputes are resolved quickly through negotiation or a price adjustment mechanism built into the contract. Others escalate into formal proceedings, whether that means litigation in the High Court, expert determination for accounting questions, or arbitration if the SPA specifies it.
The stakes are often significant, both financially and reputationally, which is why prevention tends to be far cheaper than cure.
Key steps
- Carry out proper due diligence early. Before signing anything, take the time to investigate the target properly. Financial, legal, tax, commercial, and employment due diligence each uncover different risks. Gaps here are where most post-completion disputes start, because buyers later discover problems they feel should have been disclosed and sellers argue the information was available.
- Negotiate the SPA carefully. The share purchase agreement is where rights, remedies, and risk allocation are hammered out. Warranties, indemnities, disclosure letters, caps on liability, time limits for claims, and dispute resolution clauses all need attention. A carefully drafted SPA closes off ambiguity and gives both sides a clear framework if something goes wrong.
- Build in clear mechanisms for price adjustments. Completion accounts, locked-box mechanisms, and earn-outs are all common in UK deals and all generate disputes when the drafting is loose. Define the accounting policies, the reference date, the review process, and the route to expert determination if the parties cannot agree on the final numbers.
- Plan the integration before completion. Many disputes arise not from the deal itself but from the messy integration that follows. Decide in advance who runs what, how key employees will be retained, how customer relationships will be managed, and how any cultural friction will be handled. A weak integration plan often turns small issues into formal claims.
- Act promptly if a dispute looks likely. Most SPAs contain strict notification requirements and short time limits for warranty claims. Missing a deadline can extinguish a perfectly good claim. If something feels wrong after completion, gather the evidence, check the notice provisions in the SPA, and take steps before the clock runs out.
Common questions
If you're dealing with this kind of situation, a call with an experienced legal adviser can help you work out the right next step — from £89.
Common questions
Q What are the most common types of M&A disputes in the UK?
The most frequent issues involve breach of warranty claims, disagreements over completion accounts or earn-out payments, tax covenant claims, and allegations of misrepresentation during due diligence. Shareholder disputes within the combined business and arguments over restrictive covenants given by sellers are also common. The exact pattern depends on deal structure, but contractual promises about the target's condition tend to be the biggest source of friction.
Q How long do I have to bring a warranty claim after completion?
Time limits are set by the share purchase agreement itself rather than by statute, and they vary from deal to deal. General warranty claims often have to be notified within one to two years of completion, while tax warranty and covenant claims typically have longer periods that reflect HMRC enquiry windows. Always check the specific notice periods and formal requirements in your SPA, because missing them can destroy the claim.
Q What is an earn-out dispute?
An earn-out is a chunk of the purchase price that depends on the target hitting future financial targets, often over one to three years. Disputes happen when the seller believes the buyer has run the business in a way that reduces the earn-out, when accounting policies are applied differently from what the seller expected, or when the targets themselves are ambiguous. Clear drafting and protective covenants for the seller help reduce this risk.
Q Can M&A disputes be resolved without going to court?
Yes, and most are. Negotiation between the parties resolves a large share of disputes, often with a commercial settlement. Completion accounts and earn-out disagreements are commonly referred to an independent accountant acting as expert. Mediation is widely used to narrow the issues, and some SPAs require arbitration instead of litigation. Court proceedings in the Business and Property Courts tend to be the last resort.
Q What is the difference between a warranty and an indemnity?
A warranty is a contractual statement about the target, for example that its accounts are accurate or that there is no ongoing litigation. Breaching it gives rise to a damages claim, with the buyer needing to prove loss and mitigate it. An indemnity is a promise to reimburse the buyer pound-for-pound if a specific risk materialises, without the usual hurdles of proving loss. Indemnities are commonly used for known risks flagged during due diligence.
Q Does the disclosure letter protect the seller?
Yes. The disclosure letter sits alongside the SPA and qualifies the warranties by setting out matters the seller has told the buyer about. If an issue is properly disclosed, the buyer generally cannot later claim for breach of warranty in respect of it. The scope and specificity of disclosures are often hotly negotiated, and the courts look closely at whether a disclosure was fair and specific enough to do its job.
Q What should I do first if I think I have a claim against the seller?
Start by locating the SPA and reading the warranty, indemnity, and notice provisions carefully. Note any deadlines and the required form of notice. Gather the documents that evidence the problem and quantify your likely loss. Acting quickly matters because short contractual time limits can bar an otherwise strong claim. It is usually sensible to get professional help before issuing any formal notification.
If you're dealing with this kind of situation, a call with an experienced legal adviser can help you work out the right next step — from £89.
Sources
This guide is based on primary UK law and official guidance.
- Guidance · HMCTSBusiness and Property Courts – HM Courts & Tribunals Servicegov.uk
- Guidance · Companies HouseCompanies House – Company Informationfind-and-update.company-information.service.gov.uk
- Guidance · HMCTSCivil Procedure Rulesjustice.gov.uk
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Worried a deal dispute is brewing?
M&A disagreements move quickly and the contractual deadlines in your SPA can be unforgiving. An experienced legal adviser can talk through your specific situation on the phone and help you think through what to do next, based on what you describe.
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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.