© Copyright Acquisition International 2025 - All Rights Reserved.

Article Image - A Deep-Dive into Mergers & Acquisitions in the Age of Mass Tort
Posted 7th August 2023

A Deep-Dive into Mergers & Acquisitions in the Age of Mass Tort

Mergers and acquisitions are a part of business growth, with the former allowing businesses to join arms to increase their financial muscle power. In contrast, the latter allows businesses to buy out their competition or diversify. While they come with advantages, they also come with the risks of buying into a company headed for a […]

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

A Deep-Dive into Mergers & Acquisitions in the Age of Mass Tort

Mergers and acquisitions are a part of business growth, with the former allowing businesses to join arms to increase their financial muscle power. In contrast, the latter allows businesses to buy out their competition or diversify.

While they come with advantages, they also come with the risks of buying into a company headed for a mass tort which can significantly impact your investment.

This guide looks into the complexities of mariners and acquisition in the age of mass tort and how to go about them, so keep reading for a comprehensive insight.

Understanding Mergers and Acquisitions

Mergers occur when two or more companies agree to combine operations to become a single entity. It involves negotiations among the entities, including approval by shareholders and regulatory bodies.

Mergers usually involve smaller companies coming together to get on level ground with a typical competitor. By coming together, the smaller entities have increased their combined market share and efficiency in operations, which helps them stay competitive.

Acquisitions

Acquisitions involve buying off another company. The dominant player in the industry often employs this strategy and often aims to eliminate competition. However, it can also help diversify into slightly different areas, access new markets, or bring in fresh talent

Impact of Mass Tort on Mergers and Acquisitions

A mass tort occurs when many claimants file a civil suit against one defendant at the same time. For example, a water bottling company selling contaminated water affects many people simultaneously and consequently gets sued by many people at once.

Sometimes, the harm caused by a defective product is not immediate, so you could get into a merger or acquire a company while the trouble is brewing. For example, suppose the water problem in the above example causes damage over time, but the damage is only apparent after several months or years of consuming the water. You acquire the company just before the damage comes to light. As the product manufacturer, you will have liability for a problem you did not cause, which would mean you lost money in the merger or acquisition. 

In the past, class action and mass tort litigation news were not as common. Today thanks to increased awareness of consumer rights, liability lawsuits are becoming pretty common, with some mass torts settling for billions of dollars.

Strategies for Navigating Mergers and Acquisition in the Mass Tort Age

Exercising Due Diligence

Like everything else involving huge investments, exercising due diligence is key before a merger. First, investigate the target company’s past and pending lawsuits to understand how diligent it is at avoiding lawsuits.

A few liability lawsuits in the past are not necessarily a red flag because every business will have a few over time, but if they are more than what you would deem normal, you need to consider whether moving forward is the best idea. 

Engaging Specialized Legal Counsel

Your investigations alone may not be sufficient in identifying potential future litigation. Also, the risks involved are too significant to take lightly, so consider working with a lawyer specializing in tort law. Having a specialized lawyer ensures that all aspects of risk assessment are considered and matched with the best cause of action to minimize risks.

Mitigating Risks 

Once you identify potential risks, the next step is mitigating them, which can take several approaches. The first approach is negotiating an acquisition or share price that reflects the potential mass tort liability. So you buy a lower price to ensure you do not run into losses.

You can then use the balance to buy sufficient coverage for potential liability lawsuits. However, it’s important to note that insurance companies will charge high premiums for companies with a history of tort or even deny coverage if the risk is too high.

You can also agree on setting aside a contingency fund for potential mass tort refundable after a specific number of years. 

Final Words

Mergers and acquisitions are part of business growth. But they can also become a business’s worst nightmare when not handled properly. For example, when mass tort gets into the picture. However, with the right understanding, making the right choices and avoiding getting your business into a financial mess is possible.  

Categories: News


You Might Also Like
Read Full PostRead - Eye Icon
The Growing Importance of Software Asset Management for Businesses
News
17/06/2024The Growing Importance of Software Asset Management for Businesses

Software has become an integral part of business operations across all industries. From productivity tools and communication platforms to specialized applications and enterprise solutions, the reliance on software is undeniable.

Read Full PostRead - Eye Icon
Businesses failing to reap the rewards of total talent acquisition due to siloed hiring activity
M&A
14/10/2019Businesses failing to reap the rewards of total talent acquisition due to siloed hiring activity

A new study commissioned by global talent acquisition and management firm, Alexander Mann Solutions, has revealed that businesses aren’t fully reaping the rewards of total talent acquisition (TTA) and the fluid workforce due to siloed hiring activity.

Read Full PostRead - Eye Icon
Revolutionising Resolution – The Rise of Online Dispute Resolution
Innovation
09/05/2016Revolutionising Resolution – The Rise of Online Dispute Resolution

Ajuve is a highly innovative online dispute resolution service whose slogan is ‘Hate lawyers? Love Ajuve”. A bold statement, perhaps, but their new service is targeting the public’s many reservations about the legal industry, and is designed to revolutio

Read Full PostRead - Eye Icon
Reduce Employee Turnover With These 5 Strategies
Strategy
01/03/2023Reduce Employee Turnover With These 5 Strategies

Managing a business is more than overseeing your operations and keeping your company's finances afloat. One of the equally important tasks you must prioritize is caring for your organization's vital asset- your employees.

Read Full PostRead - Eye Icon
Adapting to a Volatile Trading Market in 2022
Finance
15/06/2022Adapting to a Volatile Trading Market in 2022

Volatility is a common part of the trading landscape for experienced investors, but it’s still something many struggle with when it comes to securing and managing their portfolio. The transition from 2021 and 2022 has been a complex one for new investors and

Read Full PostRead - Eye Icon
CEO of the Month, Belgium: Jan De Backer, FLUIDDA
Leadership
28/10/2015CEO of the Month, Belgium: Jan De Backer, FLUIDDA

FLUIDDA develop proprietary diagnostics for lung diseases, such as asthma, chronic obstructive pulmonary disease and lung fibrosis.

Read Full PostRead - Eye Icon
Fried Frank Harris Shriver & Jacobson LLP Advise Hormel Foods’s acquisition of Applegate
Finance
15/07/2015Fried Frank Harris Shriver & Jacobson LLP Advise Hormel Foods’s acquisition of Applegate

Fried Frank Harris Shriver & Jacobson LLP Advise Hormel Foods's acquisition of Applegate (Hormel’s largest deal $775 million)

Read Full PostRead - Eye Icon
Quindell Plc Shares Suspended
Finance
29/06/2015Quindell Plc Shares Suspended

Shares in Insurance firm suspended after U.K Financial Conduct Authority confirms investigation.

Read Full PostRead - Eye Icon
Ingenious IP Lawyer
Legal
18/01/2021Ingenious IP Lawyer

The murky world of Intellectual Property is hotly contested, with many law firms handling portfolios on a client’s behalf. As we look once again to those lights of the legal profession, we turn to Santiago R. O’Conor, the Leading Intellectual Property Pros



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have a number of unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow