M&A Disputes In India: Legal Frameworks, Quantum Analysis And Resolution Pathways

1. Introduction

India's mergers and acquisitions (M&A) market has evolved into a high-velocity ecosystem shaped by private equity, strategic buyouts, promoter exits, cross-border transactions and platform-led consolidation across technology, manufacturing, healthcare, financial services, logistics, and consumer businesses. Since 2020, the market has witnessed pronounced cycles, reflecting pandemic-era uncertainty, supply chain disruptions, interest rate shifts, geopolitical risk, and valuation resets in global capital markets. After strong activity in 2021 and 2022, Indian dealmaking saw a slowdown in 2023 with reported M&A value of approximately US$79 billion. In 2024, the market rebounded with about a 38 per cent increase to around US$109 billion, driven by renewed investor confidence, sectoral consolidation, and improved risk appetite.

These fluctuations matter because M&A contracts are built on assumptions. When market sentiment changes, when revenue forecasts are missed, when customers churn, or when regulatory approvals delay closing, parties often begin to interpret the same contractual provisions differently. In a high-growth phase, buyers may accept aggressive projections and pay for future upside through earn-outs and contingent consideration. In a market correction, the same buyer may scrutinise completion accounts, accounting policies, and representations and warranties to reallocate loss and recover value. Sellers, on the other hand, may insist that post-closing underperformance reflects external headwinds, integration failures, or buyer conduct, especially where profitability thresholds are linked to deferred payments.

The result is a rise in M&A disputes in India spanning breach of warranty claims, indemnity disputes, purchase price adjustments, completion accounts disagreements, earn-out litigation, fraud and misrepresentation claims, shareholder disputes, and regulatory issues involving SEBI, RBI/FEMA, sectoral regulators, and tax authorities. Increasingly, these disputes are resolved through domestic arbitration, international arbitration (often seated in Singapore or London), the National Company Law Tribunal (NCLT) in oppression and mismanagement or scheme-related matters, and High Courts in enforcement and interim relief proceedings.

A defining feature of modern M&A disputes is that they are no longer purely legal. They are deeply financial. Tribunals and courts frequently need to determine not just liability, whether a contractual breach occurred, but also quantum, what loss was suffered, whether the loss was foreseeable, whether it was caused by the breach, and how damages should be measured. This is where quantum experts and valuation experts play a critical role. They assist tribunals and parties in understanding complex accounting concepts, business valuation approaches, damages frameworks, causation analysis, and the impact of alleged misstatements or conduct on enterprise value and cash flows.

To illustrate, quantum experts are commonly engaged in situations such as these. A component of purchase price is contingent on the target's operating profit, defined to exclude "exceptional items" and the parties dispute how to classify costs and calculate the metric. A buyer alleges that the seller breached a warranty relating to a significant customer relationship and claims that churn reduced the value of the target. A buyer claims it was fraudulently induced into the deal due to misrepresentations about IT infrastructure, cyber resilience, or data integrity, and seeks damages on a "no-transaction" basis. A seller alleges that the buyer acted in bad faith to avoid meeting profitability targets and defeat earn-out payments. Each of these disputes requires a close reading of the sale and purchase agreement (SPA), a clear understanding of accounting policy choices, and a valuation-led quantification of loss.

This article provides a detailed, keyword-rich analysis of M&A disputes in India, covering the deal lifecycle, the legal framework under Indian contract and corporate law, the most litigated SPA clauses, common dispute types, and the role of quantum analysis in valuation and damages. It also sets out practical resolution pathways and risk mitigation strategies that are useful for general counsels, deal teams, founders, promoters, private equity funds, and strategic acquirers.

2. Overview of the M&A Transaction Process and Dispute Triggers

An M&A transaction typically progresses through five broad phases: pre-signing, signing, post-signing and pre-closing, closing, and post-closing. Each stage has its own dispute risk profile, and a well-advised transaction strategy anticipates where friction may emerge.

2.1 Pre-signing stage: NDA, term sheet, due diligence, and negotiation

Most transactions begin with a non-disclosure agreement (NDA). Although NDAs appear routine, disputes arise where confidentiality obligations are breached, information is shared with competing bidders, employees are solicited prematurely, or sensitive data is used to build competing operations. In India, confidentiality disputes often lead to urgent interim relief applications, including injunctions to restrain misuse of information and orders to return or destroy confidential materials.

After the NDA, parties typically execute a term sheet, letter of intent (LOI), or memorandum of understanding (MoU). These documents capture key commercial terms such as price, structure (share sale, asset sale, slump sale, merger), exclusivity, break fees (where agreed), timeline, conditions precedent, and the framework for definitive agreements. Even when labelled "non-binding", term sheets can generate disputes. Indian courts have repeatedly emphasised that labels are not determinative; enforceability turns on a holistic assessment of terms, the completeness of key commercial elements like consideration, and the conduct and correspondence evidencing intention. In practical terms, disputes often arise around exclusivity obligations, good-faith negotiation commitments, and whether parties wrongfully walked away after inducing reliance.

Due diligence is the next major risk allocation milestone. Financial due diligence, tax due diligence, legal due diligence, and operational due diligence shape the scope of representations and warranties, specific indemnities, disclosure schedules, and pricing mechanics. A limited due diligence exercise may leave buyers exposed to hidden liabilities, contingent litigation, regulatory non-compliance, employee claims, data privacy risk, cybersecurity vulnerabilities, or customer concentration concerns. Conversely, sellers often argue that findings were disclosed, or that buyers assumed risk by proceeding despite red flags. These disputes frequently become battles over disclosure—what was disclosed, how it was disclosed, whether disclosure was "fair", and whether disclosure qualifies a warranty or limits a claim.

2.2 Signing: contract finalisation and risk allocation

Signing is the point at which the SPA and related transaction documents become binding. At signing, the legal architecture of the deal crystallises, including purchase price, payment schedules, escrow structures, locked-box provisions, completion accounts mechanics, earn-out triggers, representations and warranties, indemnities, liability caps, de minimis thresholds, limitation periods, termination rights, material adverse change provisions, and dispute resolution clauses.

Many M&A disputes arise because key definitions are not drafted with sufficient precision. Definitions like "Net Debt", "Working Capital", "EBITDA", "Exceptional Items", "Leakage", "Permitted Leakage", "Material Adverse Effect", "Ordinary Course of Business", and "Fraud" can determine millions of dollars in outcomes. Post-closing, parties often discover that they negotiated different commercial expectations under the same words.

2.3 Post-signing and pre-closing: conditions precedent, regulatory approvals, and interim covenants

The period between signing and closing is frequently the most dispute-prone phase, particularly in India where regulatory approvals can be complex. Conditions precedent may include Competition Commission of India (CCI) approval, sectoral approvals (insurance, telecom, banking, payments), RBI/FEMA compliance for cross-border transfers, third-party consents (customers, lenders, landlords), internal approvals, and completion of restructuring steps. Delays or failures can trigger termination rights, renegotiations, claims of breach, and disputes over whether conditions were satisfied, waived, or frustrated.

Interim operating covenants requiring the target to operate in the ordinary course and refrain from certain actions (e.g., incurring debt, changing accounting policies, entering major contracts, hiring/firing senior staff) often become contentious. Sellers may argue they needed to respond to business realities; buyers may argue that covenant breaches impaired value. Material adverse change (MAC) or material adverse effect (MAE) clauses can also become flashpoints where buyers seek to exit or reprice the deal due to business deterioration before closing.

2.4 Closing: transfer of ownership and completion formalities

Closing involves transfer of shares, control, management, and payment of consideration. Disputes at closing often involve escrow release mechanics, last-minute third-party consents, closing deliverables, resignations and appointments of directors, and closing accounts deliverables. Where completion accounts are involved, the buyer may pay a provisional price at closing and later seek adjustments based on closing balance sheet metrics.

2.5 Post-closing: earn-outs, indemnities, warranties and shareholder disputes

Post-closing disputes dominate modern M&A. Buyers often discover liabilities or inconsistencies after integration, while sellers may feel that the buyer's management decisions depressed performance and triggered lower earn-outs. Indemnity claims, warranty claims, and disputes over restrictive covenants (non-compete, non-solicit, confidentiality) are common. Where sellers retain minority stakes or board seats, shareholder disputes can arise over governance, reserved matters, information rights, related party transactions, exit options, and valuation at exit.

3. Key SPA Clauses and Legal Framework under Indian Law

Indian M&A disputes are primarily contractual. The SPA is the centre of gravity. Courts and tribunals interpret SPAs using ordinary principles of contract interpretation, read with the Indian Contract Act, 1872, and applicable corporate and regulatory law. A clause-by-clause understanding is essential for both dispute strategy and risk prevention.

3.1 Purchase price, payment terms, escrow, and adjustments

Purchase price terms often specify the overall consideration, payment schedule, escrow arrangements, holdbacks, and any deferred consideration. Disputes arise when parties disagree on the conditions for release from escrow, the meaning of "final determination" for claims, or whether a claim was properly notified to hold back escrow amounts.

Completion accounts disputes are common because they require preparation of a closing balance sheet and computation of net debt and working capital. The SPA should specify the accounting policies, the hierarchy of standards (e.g., Ind AS/IGAAP, consistent with past practices, and specific overrides), timelines, review rights, and dispute escalation mechanisms.

Locked-box mechanisms fix price at signing based on a historical balance sheet, combined with protections against "leakage" between locked-box date and closing. Leakage disputes often turn on what constitutes permitted leakage and whether management fees, dividends, related-party settlements, or unusual payments were authorised.

Earn-out mechanisms link deferred consideration to future performance. Disputes often focus on calculation of EBITDA, revenue recognition, exceptional items, cost allocation post-integration, transfer pricing, and the buyer's operational conduct. The SPA should address governance during the earn-out period, audit rights, accounting standards, and standards of conduct (e.g., good faith, not to deliberately frustrate earn-out).

3.2 Representations and warranties: disclosure, materiality and remedies

Representations are assertions of fact (past or present), while warranties are contractual promises about the state of affairs (present or future). Warranties are typically accompanied by indemnification rights or damages remedies if breached. Warranties cover legal capacity, title, absence of litigation, compliance with law, tax matters, employment, IP, data protection, material contracts, customer relationships, financial statements, and absence of undisclosed liabilities.

M&A warranty claims often turn on disclosure schedules. Sellers argue that disclosures qualify the warranties; buyers argue that disclosure was incomplete or not "fair". Indian law does not have a single codified doctrine of "fair disclosure" in M&A, so disputes typically revolve around contractual definitions and general principles of misrepresentation and good faith, along with the interpretation of the disclosure framework agreed by the parties.

Under Indian law, damages for breach of contract are governed by Section 73 of the Contract Act. The principle is that compensation is payable for loss that naturally arises in the usual course from the breach or which the parties knew to be likely at the time of contract, while remote and indirect losses are excluded. This foreseeability and causation framework is central to quantum disputes.

3.3 Indemnities: scope, procedure, and crystallisation

Indemnity clauses provide contractual compensation for specified events, often including warranty breaches, third-party claims, tax exposures, and identified due diligence risks. Indemnities typically include procedural requirements: notice timelines, defence control for third-party claims, cooperation obligations, settlement approval rights, and mitigation duties.

A key aspect of indemnity disputes is whether the indemnified party must be "out of pocket" to claim. Indian jurisprudence recognises that a party may claim indemnity once liability has crystallised, even if actual payment has not yet been made, depending on contractual terms and facts. Mitigation remains relevant; failure to mitigate may reduce quantum even if it does not eliminate entitlement.

3.4 Termination, conditions precedent and remedies

Termination clauses specify circumstances in which a party may exit, such as material breach, failure of conditions precedent, prolonged stop-date expiry, insolvency, or regulatory prohibition. Disputes often arise where one party alleges wrongful termination, repudiatory breach, or strategic termination to escape an unfavourable price.

Because M&A deals are often time-sensitive, termination disputes frequently lead to urgent interim relief—injunctions restraining termination, orders preserving status quo, or directions to complete closing. Where arbitration clauses exist, parties often seek Section 9 interim measures under the Arbitration and Conciliation Act, 1996.

3.5 Material Adverse Change clauses: Indian position and interpretive guidance

MAC clauses allow parties to exit or renegotiate if adverse events occur between signing and closing. Indian jurisprudence on MAC remains limited, so tribunals often look to persuasive principles from other jurisdictions. In practice, MAC disputes focus on whether the adverse event is durationally significant (long-term rather than short-term), whether it is quantitatively and qualitatively material, and whether it must be assessed in the context of the overall transaction and negotiated risk allocation.

3.6 Restrictive covenants: non-compete and non-solicitation

Under Section 27 of the Contract Act, agreements in restraint of trade are generally void. Indian courts have traditionally refused to enforce post-employment non-competes, but in M&A settings, courts have shown more nuance, especially where restraint is tied to sale of goodwill or is necessary to protect legitimate business interests.

Non-solicitation clauses have been enforced more readily in commercial contexts, particularly where they restrict solicitation of customers or employees rather than imposing an absolute restraint on trade. Drafting precision is critical: scope, duration, geography, and the nature of restricted conduct affect enforceability and the likelihood of injunctive relief.

3.7 Governing law and dispute resolution: arbitration, seat and enforceability

Many sophisticated M&A agreements adopt arbitration. Parties often prefer international arbitration for cross-border deals, with seats such as Singapore or London, and Indian courts playing a supportive role in interim measures and enforcement. Multi-tier dispute resolution clauses, requiring negotiation or mediation before arbitration, are common and can affect admissibility of claims if not complied with.

For India-seated arbitrations, the Arbitration and Conciliation Act, 1996 provides the framework for interim measures, tribunal powers, awards, and enforcement. For foreign-seated arbitrations, Indian courts may become involved at the enforcement stage or for interim relief in limited circumstances depending on clause drafting and statutory provisions.

4. Common Types of M&A Disputes in India

4.1 Purchase price adjustment disputes: completion accounts and working capital

Completion accounts disputes are among the most frequent M&A disputes, especially in private company acquisitions. These disputes typically involve working capital adjustments, net debt calculations, classification of receivables, inventory obsolescence, provisions, contingent liabilities, and changes in accounting policies.

A classic dispute arises when the buyer asserts that receivables are overstated or that inventory should be written down as obsolete, reducing working capital and triggering a price reduction. Sellers often argue that accounting has been applied inconsistently or that buyer is using post-closing hindsight to reclassify items. The SPA's accounting hierarchy and dispute resolution mechanism, including expert determination, can be decisive.

4.2 Earn-out disputes: EBITDA, exceptional items and buyer conduct

Earn-outs are particularly common in India's technology and founder-led acquisitions, where there is uncertainty about growth sustainability. Disputes arise on how EBITDA is computed, whether certain costs are "exceptional" or "non-recurring", whether revenue recognition is consistent, and whether the buyer shifted costs into the target to depress profitability.

Seller allegations of "bad faith" often arise where the buyer changes strategy, deprioritises the target's products, integrates teams in a way that disrupts performance, or reallocates key customers. Buyers respond that they retain managerial discretion post-acquisition and that earn-outs are contingent by design. Well-drafted earn-out clauses attempt to define the boundaries of discretion and include governance safeguards, reporting obligations, and audit rights.

4.3 Breach of warranty disputes: financial statements, undisclosed liabilities, compliance failures

Warranty claims frequently relate to financial statements being inaccurate, not prepared in accordance with applicable accounting standards, or not providing a true and fair view. Buyers may also claim that liabilities were not disclosed, tax exposures, regulatory non-compliance, employee claims, environmental liabilities, or customer disputes.

Quantum becomes complex because the buyer must often show not only that a warranty was false, but also that the breach caused measurable loss. This typically involves assessing the difference between the business "as warranted" and "as-is", a valuation exercise that often requires expert evidence.

4.4 Indemnity disputes: third-party claims and procedural compliance

Indemnity disputes often turn on whether the indemnity event occurred, whether notice requirements were followed, whether the indemnified party mitigated losses, and whether losses are recoverable under the indemnity scope. Third-party claims require careful handling because the indemnifying party may seek defence control or object to settlement terms.

4.5 Misrepresentation and fraud: contract voidability and damages strategy

Misrepresentation involves false statements made without intent to deceive; fraud requires intentional deception. Under Indian law, contracts induced by fraud or misrepresentation are voidable at the option of the aggrieved party. The aggrieved party may seek rescission or damages to be placed in the position it would have occupied had the representation been true.

In practice, rescission is rare in complex M&A due to integration, third-party rights, and operational realities. Parties often claim damages instead. Fraud claims are high-stakes because they may bypass contractual limitations, including caps and limitation periods, depending on drafting and applicable principles. These claims frequently require forensic investigation, causation analysis, and careful quantification under an appropriate damages framework.

4.6 Shareholder disputes after closing: governance, exit, oppression and mismanagement

Where sellers retain minority stakes, shareholder disputes may arise over reserved matters, board control, information access, related party transactions, and exit price. Joint ventures are particularly prone to deadlocks and disputes around management conduct.

Under Indian company law, oppression and mismanagement claims may be brought before the NCLT. These disputes sometimes intersect with shareholder agreements and arbitration clauses, leading to jurisdictional contests. Valuation disputes also arise in exit mechanisms, buy-sell options, and compulsory transfers.

4.7 SEBI and public company disputes: open offer pricing and valuation conflicts

Public company acquisitions in India require compliance with the SEBI Takeover Regulations. Disputes may arise around open offer triggers, minimum offer price computation, and whether valuations fairly reflect shareholder interests. Investors and regulators may challenge valuation assumptions, comparable multiples, and fairness opinions, particularly where market prices diverge from negotiated transaction prices.

5. Quantum Analysis in M&A Disputes: Accounting, Investigations, Valuation, and Damages

Quantum is often where M&A disputes are won or lost. Even where liability appears strong, poorly framed damages claims may fail due to causation gaps, double counting, failure to mitigate, or the use of an inappropriate valuation date. The role of quantum experts is to provide a coherent, defensible, and tribunal-friendly analysis.

5.1 Accounting disputes: completion accounts, EBITDA, materiality and policy consistency

Accounting issues arise when parties dispute how financial metrics should be computed under the SPA. Completion accounts require determination of balance sheet items at closing. Earn-out accounts require computing profitability metrics post-closing, typically EBITDA.

Disputes often emerge because terms like "exceptional", "non-recurring", "ordinary course", or "consistent with past practices" are inherently judgment-based. For example, restructuring costs may be argued as exceptional by one side and as ordinary operational expenses by the other. A tribunal may need expert assistance to understand whether costs were unusual relative to historical patterns, whether the accounting standard supports a particular classification, and whether the SPA permits that treatment.

Materiality is another recurring theme. If alleged misstatements in financial statements are small relative to overall enterprise value, sellers may argue that they are immaterial and do not constitute a breach. Buyers may argue that the SPA's materiality thresholds differ from audit thresholds and that even seemingly small errors can affect valuation or covenant compliance. Experts often analyse materiality using multiple benchmarks: auditor materiality guidelines, SPA thresholds (de minimis and baskets), and due diligence materiality thresholds.

5.2 Forensic investigations: hidden liabilities, fraud indicators and related party analysis

Where fraud, misrepresentation, or concealed liabilities are alleged, forensic accounting becomes central. Investigations may include review of general ledgers, bank statements, invoices, customer contracts, vendor payments, and communications to determine whether liabilities existed at relevant dates or whether transactions were structured to mislead.

Investigations may also be needed to test allegations of exclusivity breach, diversion of business, or formation of competing operations through related parties. Such exercises are document-heavy and often require reconstruction of transaction flows across subsidiaries and time periods.

5.3 Damages frameworks: breach of warranty versus misrepresentation

The first quantum decision is the damages framework.

In breach of warranty claims, damages generally aim to place the claimant in the position it would have occupied had the warranties been true. The typical approach is to assess the value of the target "as warranted" and compare it to the value "as-is" in the true state, with the difference representing loss of bargain.

In misrepresentation claims, the objective often shifts to placing the claimant in the position it would have been in had it not been induced by the misrepresentation. This requires counterfactual analysis. The claimant may argue it would not have done the deal, or would have paid a lower price, or would have negotiated different protections. Damages may reflect the difference between price paid and true market value at the time, or in some cases may follow rescissory principles designed to unwind the economic effect of the transaction.

Selecting the wrong framework can undermine the entire claim. For example, using a loss-of-bargain valuation approach for a claim that legally requires out-of-pocket loss may produce an award that is not legally sustainable. Counsel and experts must align legal pleadings with the valuation methodology.

5.4 Date of assessment and hindsight: when later events can be used

Valuation depends on date. In principle, value at a given date reflects expectations at that date. Post-closing events, including market shocks, can distort the analysis if hindsight is used improperly. Yet tribunals sometimes allow limited hindsight when contemporaneous data is unavailable or where the full impact of a breach could not reasonably be assessed earlier.

Experts often justify hindsight reliance where actual results serve as the best available proxy for what would have been expected if the true facts were known. For instance, if an undisclosed IT defect caused recurring maintenance costs, post-closing actual costs may be used to estimate expected cash flow impact, provided the analysis fairly adjusts for external changes.

5.5 Standard of value: market value versus subjective value and synergy

Another crucial concept is the standard of value. Market value is generally objective, assuming a hypothetical willing buyer and seller. Subjective value may incorporate buyer-specific synergies, strategic motivations, or special circumstances.

This distinction matters because purchase price may reflect synergies or strategic premium, while damages assessment may require market-based valuation. In disputes, buyers often seek to recover a price premium arguing they paid for value that did not exist; sellers argue that premium reflected buyer strategy, not warranties. Experts must identify whether the valuation standard should incorporate synergy or exclude it, and whether minority discounts or control premiums apply depending on stake and rights.

5.6 Valuation approaches: DCF, market multiples and asset-based methods

Quantum experts typically rely on three broad approaches.

The income approach, often using discounted cash flow (DCF), estimates value as net present value of future free cash flows discounted at a risk-adjusted rate. DCF is sensitive to forecasts, discount rates, terminal values, and working capital assumptions. It is powerful for businesses with predictable cash flows but can be contested if projections are unreliable.

The market approach applies valuation multiples derived from comparable companies or comparable transactions to financial metrics like EBITDA, revenue, or net profit. Multiples require careful selection of comparables, adjustments for growth, margin, and risk profiles, and consideration of market conditions at the valuation date.

The asset-based approach values assets and liabilities, often used for asset-heavy businesses or where going-concern cash flows are uncertain. For early-stage businesses with limited profitability, cost-based or asset-based approaches may be relevant.

Tribunals may accept a blended approach, or weight methods differently based on evidentiary strength. Parties should anticipate that valuation is not a mechanical exercise but a judgment-based assessment grounded in data quality and legal framing.

5.7 Causation and mitigation: linking breach to loss

Even where breach is established, quantum requires causation. Buyers must show that loss was caused by the breach, not by external market changes, macroeconomic shocks, integration missteps, or independent business risks. Sellers often argue that decline resulted from buyer's post-closing decisions or industry downturns, and that claimed losses are too remote.

Mitigation also matters. If the claimant could have taken reasonable steps to reduce loss, renegotiating contracts, replacing vendors, upgrading systems, the failure may reduce recoverable damages. Experts often model the mitigation impact, including timing and costs, to produce a net loss estimate consistent with legal principles.

6. Resolution Pathways for M&A Disputes in India

6.1 Negotiation, dispute boards and early neutral evaluation

Many M&A disputes settle through structured negotiations, particularly where ongoing business operations are at stake. Some SPAs include escalation clauses requiring management-level discussions before arbitration. Early neutral evaluation by a jointly appointed expert can also unlock settlement by narrowing differences on accounting or valuation.

6.2 Expert determination for completion accounts and technical issues

For completion accounts and narrow accounting disputes, expert determination is often efficient. A jointly appointed accounting expert resolves defined issues, reducing time and cost compared to full arbitration. However, parties must draft the expert determination clause carefully, including scope, standard of review, process timelines, and whether the determination is final and binding.

6.3 Arbitration: domestic and international

Arbitration is the dominant mechanism for private M&A disputes. It offers confidentiality, specialist decision-makers, and procedural flexibility. India-seated arbitrations allow Indian courts to grant interim measures under Section 9 and assist in evidence and enforcement. Foreign-seated arbitrations may be preferred for cross-border neutrality, with India becoming relevant at enforcement or for interim relief depending on clause structure.

6.4 Court litigation and interim relief

Courts remain relevant for interim injunctions, anti-suit relief, enforcement of arbitral awards, and in disputes where arbitration is not applicable. M&A disputes often involve urgent relief to prevent dissipation of assets, preserve escrow funds, restrain solicitation, or maintain confidentiality.

6.5 NCLT proceedings for shareholder oppression and schemes

Where disputes relate to oppression and mismanagement, corporate governance, or schemes of arrangement, NCLT jurisdiction becomes central. Valuation issues in mergers, demergers, capital reduction, and minority squeeze-outs often arise in this context, with courts examining fairness, non-discrimination, and public interest considerations.

7. Practical Risk Mitigation: Deal Drafting and Dispute Prevention Checklist

The best M&A dispute strategy begins before signing. Several practical measures reduce litigation risk and improve enforceability.

Clear definitions in SPAs are essential, especially for EBITDA, working capital, net debt, exceptional items, leakage, permitted leakage and materiality thresholds. Accounting policy hierarchies should be explicit, and examples may be included to reduce ambiguity.

Disclosure schedules should be detailed, structured, and signed off with internal governance to minimise later disputes over what was disclosed. Sellers should avoid casual disclosures through data rooms without proper indexing and linkage to warranties.

Earn-out clauses should address governance during earn-out period, audit rights, reporting frequency, accounting standards, buyer discretion boundaries, and dispute mechanisms. Without these, earn-outs become litigation magnets.

Indemnity clauses should be operational, not theoretical. Notice procedures, defence control, settlement rights, and mitigation obligations should be practical and aligned with real-world claim handling.

Dispute resolution clauses should be carefully drafted, including seat, institution, language, governing law, interim relief rights, and multi-tier steps. Poor dispute clauses create jurisdictional fights that waste time and increase cost.

8. Conclusion

M&A disputes in India are rising not merely because deal volumes fluctuate, but because modern deal structures are increasingly contingent, data-driven, and assumption-sensitive. Completion accounts, earn-outs, warranties, indemnities, MAC clauses, restrictive covenants, and regulatory compliance together form a dense contractual ecosystem where differences in interpretation can lead to high-value disputes.

As tribunals and courts grapple with these disputes, quantum analysis is no longer secondary. It is central. The ability to quantify loss with methodological discipline, establish causation, apply the correct damages framework, and present valuation evidence that is coherent and legally aligned often determines outcomes.

For general counsels, founders, private equity investors, and strategic acquirers, the key takeaway is straightforward: invest in drafting, disclosure and valuation clarity at the transaction stage, because the cost of ambiguity is usually paid later, through prolonged arbitration, forensic investigations and contested quantum battles.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.