Vance Chapman Featured in Imprima Report on Distressed M&A

Akin Gump corporate partner Vance Chapman has been quoted throughout an Imprima report (in association with Mergermarket) titled, “Making the best out of distressed M&A.” The publication looks at what a potential economic slowdown, as well as broad structural changes in several industries, might mean for distressed M&A deals in 2020.

Speaking first about which factors might be most influential this year, Chapman pointed to “the Asian slowdown, the possibility of trade wars, the Trump presidency, the Brexit saga and technological change.” He also referenced, however, what he described as, “the unknown-unknowns” that could “catch everybody out.” In discussing particular locales of concern, Chapman said the European manufacturing sector looks vulnerable, as does China’s ability to cope with domestic debt.

Chapman said he sees funds as being “typically more successful than corporates in distressed situations because they can move more quickly.” Specialist funds, which he said are “usually ready to transact at the drop of a hat,” may not see huge growth this year in terms of distressed fund formation, he noted.

There are many challenges to participating in a distressed M&A process, Chapman pointed out. “If your target is asset-heavy,” he said, “it’s straightforward. Otherwise, you’ll need certainty that existing value is transferable.” With regard to the due diligence process, he said technology can be helpful with it.

Finally, looking at life beyond a deal and the issue of warranty and indemnity (W&I) insurance, Chapman predicted that it might become more common in distressed M&A. “Brokers and the insurance market generally are keen to expand their business,” he said, “but it will generally come at a significant premium in a distressed scenario.” Still, he argued that “advances in technology may assist with the assimilation of whatever information is available and therefore the modelling underpinning decisions on premium and whether or not to offer insurance in the first place.”

To read the full report, which was first published by—and is reproduced with permission from—Imprima (in association with Mergermarket), please click here.