Indiana Lawyer reported in a recent article that many mediators and attorneys say alternative dispute resolution (ADR) may not be the best route for mergers and acquisitions (M&A) transactions. The publication spoke to Indianapolis corporate partners Mallory Korpalski and Trevor Belden for insight on the M&A market and incorporating ADR provisions into M&A transactions.
Korpalski shared that the current M&A market is competitive and busier than she could have imagined two years ago, as sellers who figured out supply chain and safety protocols can now demand better pricing and better terms than before. “Companies found a way to rebound. And, you know, buyers had a lot of money available,” she said. “And so it’s sort of an odd dynamic when I think of what we saw when deals would fall apart.”
Korpalski acknowledged that not all deals were financially secure during the COVID-19 pandemic and that financials were not what anyone expected when they pursued M&A deals, causing tension. At the same time, she noted that America’s courts experienced backlogs while parties in the middle of transactions wanted to keep the ball rolling.
“I think what we’re seeing now is sort of what to do about it going forward. We’re two years into the pandemic; everyone has pivoted, whether it’s successfully or not,” Korpalski observed.
The publication spoke to Belden for his thoughts on whether ADR is a solution to speeding up the process for M&A deals stuck in limbo.
Belden said he believes courts should be the default, while ADR is used only as specific circumstances warrant it. “If a client says, ‘Look, our industry is so specific, we just think it’s a good idea,’ I totally defer to the client,” Belden mentioned. “And I think that you can get a good outcome with arbitration. But that’s not my default.”
Additionally, Belden discussed how he has not seen friction on the issue of deal terms when it comes to incorporating ADR provisions into M&A transactions. He explained that’s because there’s already an understanding from buyers and sellers that new terms will be included to account for COVID-related changes. “It was just negotiating what those were,” Belden noted.