Legal Market Leaders Present First Joint Study of M&A Transactions in Russia
The results of the first unique joint study by Russian legal firms on M&A transactions from 2022 to 2024 were unveiled at the Mergers and Acquisitions in Russia 2024 conference, held on November 14. The study was conducted collaboratively by ALRUD, Nikolskaya Consulting, Orion, Stonebridge Legal, Mansors, Melling, Voitishkin & Partners, and KKMP.
This study covers about 100 M&A transactions conducted in Russia in 2022–2024, analyzing a broad spectrum of transaction parameters, including transaction structure, form, key terms, approaches to risk balance allocation between the parties, applicable law, and much more.
Such joint research of M&A practice is the first of its kind for the Russian legal services market.
Selected findings of the study are provided below:
Russian law governs 61% of M&A transactions in Russia, reflecting the development of Russia’s legal system and a focus on national law for domestic transactions.
About 80% of transactions opt for commercial arbitration for dispute resolution, indicating parties' preference for confidentiality and expertise in handling disputes.
The vast majority of transactions are structured with a duty to comply with certain conditions precedent and a specific way in which the seller undertakes to conduct business.
Only 43% of parties exclude quality provisions.
1/3 of transactions allows a seller to submit a second disclosure letter, but in this case almost 80% of transactions provide for the buyer’s right to reject the deal if risks are identified.
In half of the cases, the seller’s responsibility for all claims is limited to 100% of the purchase price. In other cases, a differentiated liability is usually established depending on the nature of the violation (for example, different limit of liability for fundamental and «ordinary» representations).
The average de minimis values were 0.1–0.5% of the purchase price, and the basket was 1–2.5% of the purchase price.
The average limitation period for claims is 3 years for title claims, 4 years for tax claims, and 12–18 months for standard business representations.
The parties regulate the details of reversal of transactions only in 35% of cases.
“M&A activity in Russia remains as robust as ever, as evidenced by the discussions we’ve been having for the past two years at the “Mergers and Acquisitions” conference. The participating Russian legal firms bring advanced expertise validated and tested under highly unique conditions. This joint study underscores the maturity of corporate and contract law in Russia. It marks the first time in the history of Russia’s legal market that leading national firms have collaboratively prepared an M&A transaction study." Alexander Zharskiy, Partner and Head of ALRUD’s Corporate and M&A Practice, comments.
The full study in russian is available on request via marketing@alrud.com.