Almost half of M&A deal participants said due diligence-related issues were a major disputes factor last year, according to a survey from consulting firm BRG.
The M&A Disputes Report 2026 – which surveyed more than 200 lawyers, private equity professionals and corporate finance advisors – found that 46% of respondents pointed to gaps in diligence as the most prevalent deal term and contractual factors fuelling disputes last year, a nine percentage point increase from 2024.
BRG said the increase in due diligence-related disputes may stem from how quickly M&A parties have been seeking to close deals, resulting in an incomplete diligence process or issues raised during that process not being properly addressed in the purchase agreement.
Due diligence-related factors were followed by disputes over PPAs (purchase price allocations), true-ups and completion accounts, with 37% citing those – a three percentage point drop compared to 2024.
“Disputes often emerge when markets move differently than parties anticipated at the time deals were struck, creating challenges around company performance shortfalls and valuation assumptions,” said Adam Short, a senior counsel at Travers Smith in London.
Post-closing obligations such as additional payments related to performance – so-called earnouts – were also a significant driver of disputes, with 35% citing them as a factor, up 11 percentage points from 2024.
“The rise in earnout-related disputes may be a lagging effect from deals structured during challenging conditions such as the post-Covid recovery period or the more recent spike in interest rates,” said BRG director Kevin Hagon. “When valuation uncertainty is acute, earnouts became a common way to bridge gaps between buyers and sellers. As those provisions are now being tested, earnouts are emerging as a leading driver of disputes.”
Just over a third of respondents (34%) also said both indemnity provisions and representations and warranties insurance were a prevalent disputes factor last year.
“In the US, if you have a reps and warranties policy and something goes wrong post-closing, it’s almost customary to file a claim and sort it out later,” said Frank Dery, a Chicago-based managing director at BRG. “Very few ultimately pay out, but the presence of insurance encourages parties to take the first step and file a claim to investigate the issue more so than if they did not have the policy in place.”
This disputes backdrop follows a bumper year of M&A activity, with global deal values increasing to $4.5trn in 2025, up almost 50% on 2024’s levels and the highest value since 2021, according to BRG. With M&A activity expected to remain buoyant in the year ahead, almost two-thirds of respondents said they expect dispute volumes to rise again in 2026, with 81% saying they had seen an increase in dispute volumes last year.
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