The digital asset industry seems the most ripe for M&A disputes, according to a newly released report by Berkeley Research Group.
The firm's mid-year merger and acquisition disputes report noted that 43% of surveyed dealmaking professionals expected an increase in M&A disputes in the sector — the highest of any other industry studied in the report.
Source: BRG Group
"Deals in digital assets and services are ripe for disputes as market volatility and proposed regulations disrupt cryptocurrency activity," the report noted.
The sector has witnessed a number of big ticket deals fall apart in the wake of the crypto credit crisis and meltdown of the FTX crypto exchange. In August 2022, Mike Novogratz's Galaxy Digital called off its $1.2 billion deal to acquire custody provider BitGo. More recently, BitGo said it would not go through with its plan to acquire beleaguered Prime Trust.
BitGo's suit against Galaxy over the cancelled transaction was recently dismissed by a Delaware court.
Crypto lifecycle
“The cryptocurrency industry is at a point in its lifecycle where we’ve seen a high degree of new development — companies sprouting up left and right as coin values were high and speculative conditions were optimistic — and now there’s a greater move towards consolidation, both as the industry matures and as macroeconomic headwinds shift," noted BRG Managing Director Albert Metz.
“When coupled with depressed values among major cryptocurrencies complicating profitability, this is an environment which can generate more disputes."
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