Distressed M&A: geopolitical upheaval, distressed M&A markets and strategies for success
Summary provided by officers
IBA Corporate and M&A Law Committee
A session at the IBA Annual Conference Toronto 2025, on 6 November 2025
Session Co-Chairs
Camila Goldberg, BMA Advogados, Rio de Janeiro
Ralf Morshäuser, Gleiss Lutz, Munich
Panelists
Allan Ashford, British Columbia Investment Management Corporation, Victoria
Kosturi Ghosh, Trilegal, Bangalore
Daniel Hasler, Homburger AG, Zürich
Natasha MacParland, Davies Ward Phillips & Vineberg, Toronto
Session summary
The panel examined the impact of global economic uncertainty on distressed M&A activity, addressing market trends, deal structures and jurisdictional differences. The panelists discussed strategies for managing pre-insolvency and insolvency transactions in their relevant jurisdictions and from different angles, with particular attention paid to due diligence challenges, stakeholder coordination and liability management.
Key takeaways
- distressed M&A has become a proactive strategic tool for investors and corporates navigating market volatility, with the level of success depending on disciplined process management, involving early stakeholder engagement, data readiness and clear management incentives. Companies facing liquidity challenges, operational inefficiencies or over-leveraged balance sheets are increasingly becoming acquisition targets;
- seller and buyer perspectives diverge as sellers prioritise speed and value preservation, while buyers emphasise risk mitigation and post-closing stability; aligning expectations and adopting deal structures can help bridge this gap. Different risk perspectives should also be considered: the liability risks of the seller in the case of insolvency of the target shortly after closing, while the buyer undertakes voidability and succession risks when acquiring a distressed business;
- managers must exercise heightened diligence in regard to fulfilling their fiduciary duties, particularly in relation to asset valuation and disclosure, to ensure defensible decisions are taken supported by proper documentation (ie, an independent appraisal) in distressed contexts; and
- local legal frameworks and special toolkits to facilitate transactions involving insolvency proceedings can be decisive: mechanisms such as the use of Canada’s reverse-vesting orders or synthetic warranty and indemnity (W&I) insurance can facilitate viable transactions within complex insolvency environments.