Grant Thornton survey: M&A deals and disputes are on the rise


The firm breaks down best practices for mitigating and resolving disputes


CHICAGO — A new survey on mergers and acquisitions (M&A) disputes from Grant Thornton LLP, one of America’s largest audit, tax and advisory firms, revealed that dispute activity has increased — along with an increase in overall deal volume.


The 2023 M&A Dispute Survey polled 150 active deal participants on both the buy-side and sell-side of transactions and provided insights into the most significant and timely trends shaping the dealmaking environment. For example, the survey found that 42% of respondents believe the looming economic slowdown and inflation challenges will lead to more disputes.  


While dealmaking activity has been robust — with more than 30,000 deals as of September 2023 according to Pitchbook — valuation gaps remain and there are clear indications that buyers have cash to make acquisitions and may simply be waiting for more favorable financing. Meanwhile, many sellers are holding out and awaiting higher valuations. These larger trends are impacting both negotiations and the specifics of deals.


“While M&A activity is unlikely to soon equal the record-breaking pace we saw during 2021, there is still an appetite for platform and add-on acquisitions in the current market,” said Elliot Findlay, national managing principal of Transaction Advisory at Grant Thornton. “Although high interest rates present challenges, and some sellers are holding assets longer, buyers are having success tapping into alternative funding sources and debt structures to complete deals.”


Additionally, the survey found that of the total number of deals with post-close working capital adjustments, 36% were disputed. What’s more, of the total deals with post-close earn-out adjustments, 26% were disputed. While the percentage of disputed deals appears to have decreased, an overall rise in the number of deals means the absolute volume of disputes rose when compared to the previous survey. Additionally, those disputed deals were twice as likely to be referred to a neutral accountant — 11% versus 5% in the previous survey. This increase underscores the important role of the neutral accountant.


“Disputes persist for understandable reasons,” said Max Mitchell, Purchase Agreement Advisory leader at Grant Thornton. “When there are strong motivations to close deals quickly, parties can gloss over difficult conversations up front, deferring decisions until post-closing. Contingency and subjectivity are built into the process, and a lot of money is at stake.”


Grant Thornton M&A professionals said the first step in addressing disputes is identifying their potential cause, including vague language, purchase price adjustments, working capital calculations and earn-outs. Additionally, there are best practices that can greatly reduce uncertainty and address ambiguities before they develop into issues, such as: greater clarity in the accounting language, providing an example, and evaluating earn-out timing, scheduling and metrics. Alternatively, mitigating post-closing dispute risk using a locked-box mechanism.


Grant Thornton leaders encourage companies to also consider clarifying the methodology. The more clarity achieved in the purchase agreement drafting, the more likely the deal will succeed. Financial due diligence can be a powerful ally. Yet, dealmakers on average reported that less than half (41%) of their deals involved an external financial due diligence provider.


Charles Blank, M&A Dispute Services leader at Grant Thornton, described the core drivers of disputes: “Broadly speaking, the more judgment calls the accounting for purchase price adjustments require, or the more open-ended the terms are, the more likely it is that the parties will disagree,” he said.

To see additional findings from Grant Thornton’s 2023 M&A Dispute Survey, visit


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