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Private equity dealmaking is moving faster than ever. Competitive auction processes, compressed diligence timelines, and secondary transactions have become standard features of the deal landscape—as have post‑closing disputes. For GPs, these disputes are no longer a legal sideshow; they can reshape deal-level IRR, depress fund-level KPIs, and complicate the fundraising narrative for the next vintage.
More importantly, the outcome of such disputes often significantly affects fund performance, such as hindering future fundraising capabilities. In that environment, getting damages right is not just a legal formality, but a question deserving management attention and a way to preserve value.
Published arbitral rulings over the last three years indicate that, in case of a ruling in favor of the claimant, the average award amounted to 27% of the initial damages claim. Over the long-term, this ratio averages at around 40% of the initial damages claim.1
Put differently, roughly 40% of the original equity (and potentially the entity) ticket is implicitly at risk for the seller. In contrast, for the buyer, the risk is the balance: on average, up to 60% (or more) of its damages may not be recovered.
The gap between what is claimed and what is awarded is not random. It is significantly driven by how well the damages case is analyzed, built, and explained to the tribunal.
The arbitration risk in PE deals
Today’s PE deal environment creates structural conditions for post-closing disputes. Competitive processes push sponsors to move quickly, often relying on vendor due diligence reports, management projections, and information memoranda prepared by or on behalf of the seller. And some sellers have become more ambitious about which information is considered relevant.
These dynamics increase the risk that price-relevant issues remain hidden until ownership and risk have already been transferred. Hidden customer churn, understated capex requirements, aggressive revenue recognition, one‑off items normalized into run‑rate EBITDA, or undisclosed regulatory exposure are just a few recurring fact patterns in our work. Each of them can turn a seemingly strong investment case into a source of value leakage. They force GPs to downgrade business plans, explain missed budgets to investment committees, and ultimately adjust fund return expectations.2
Arbitration offers confidentiality, keeping sensitive information and reputational matters out of the public domain. It also offers internationally enforceable awards and, critically, the appointment of decision-makers (i.e., arbitrators) with genuine M&A and transaction expertise.3 These features make it a structurally sensible forum, especially for the often complex claims at issue in post-M&A disputes involving PE funds.
Typical dispute fact patterns
Over the last few years, overpriced acquisitions arising from incomplete or misleading due diligence disclosure have become among the most common. It has become standard for buyers not only to worry about a quick integration, but also to analyze whether the target’s actual financial profile was materially different from what was presented before the signing.4
Secondaries have also become increasingly litigious, as acquiring PEs seek to preserve the profitability of their funds. Intentionally or unintentionally, there is an increase in the frequency of deals where information has not been shared, been shared incompletely, or misunderstood.
For GPs, a portfolio‑shaping or liquidity event can quickly put net asset value and reputation at risk, particularly if price‑critical information is later challenged in arbitration.
From our experience, earn-out disputes or warranty and indemnity claims, which for decades were often cited as the main examples of post-M&A disputes, are no longer keeping GPs awake at night. Their frequency appears to have stagnated and, more importantly, their typical quantum is often small compared to the exposure arising from incomplete or misleading due diligence disclosure, mispriced platforms, or overly optimistic business plans.
How quantum experts add value across the arbitration cycle
The central question in any damages analysis is the gap between what happened and what should have happened if the alleged breach had not occurred.5 In PE settings, this requires reconstructing a hypothetical financial trajectory which eliminates the disputed event, information or conduct. In such situations, it is paramount to test the counterfactual financial trajectory for reasonableness, such as by comparing it against market data, peers, or comparable transactions.
Quantum expertise spans the full arbitration cycle: in the early phase, experts for a claimant work alongside counsel to refine the theory of harm into a fact-based, economically grounded damages claim, as this avoids unreasonable speculation at the later stages.
In the development phase, experts build and/or stress‑test but‑for scenarios, analyze causation to isolate breach‑related losses from broader market or execution factors, and benchmark assumptions. In PE settings, this typically means rebuilding and challenging the original business plan, modeling alternative exit scenarios, and testing projected IRRs and value bridges for consistency with market data, peers and comparable transactions.
At the arbitral hearing, experts present and defend their analysis, respond to challenges from the opposing expert, and help the tribunal understand what is commercially realistic in a PE deal context. The clearer and more robust the quantum analysis, the easier it becomes for tribunals to reject speculative claims and award realistic amounts, if any.
AlixPartners: A quantum partner built for PE sponsors
AlixPartners’ Disputes & Valuations practice works with PE sponsors and their counsel across the full arbitration cycle, combining M&A, due diligence and valuation expertise with hands‑on experience in forums such as the International Court of Arbitration (ICC), German Arbitration Institute (DIS), London Court of International Arbitration (LCIA), International Centre for Settlement of Investment Disputes (ICSID), Vienna International Arbitral Centre (VIAC), the Swiss Rules and Stockholm Chamber of Commerce Arbitration Institute (SCC).
In multiple buy-and-build, buyout and secondary situations, we have acted as the go‑to quantum expert for global and European PE houses. In an environment where financial stakes are increasing, and limited partners scrutinize outcomes more closely, quantum expertise is no longer an optional support function. It is a value‑protection discipline that can materially influence how much of the disputed amount at risk ultimately materializes for the fund.
For GPs and deal teams, the most effective use of quantum expertise is often early in the deal making process, not at the end. Typical trigger points include assessing whether a potential claim justifies the cost and distraction of arbitration; developing a defense strategy ahead of a contested secondary sale; or reviewing a portfolio after (particularly aggressive) vendor due diligence. Engaging quantum experts at these points gives sponsors a fact-based view of value-at-risk—before dispute dynamics take over.
Footnotes
1. AlixPartners analysis.
2. Herbert Smith Freehills, [Deal or No Deal: M&A Trends and Dispute Risks for 2025] (https://www.hsfkramer.com/insights/reports/inside-arbitration-issue-19/deal-or-no-deal-ma-trends-and-disputes-risks-for-2025), Inside Arbitration, Issue 19, March 2025.
3. Freshfields, [Arbitration as a Tool for Private Capital Disputes] (https://www.freshfields.com/en/our-thinking/campaigns/international-arbitration-in-2025/arbitration-as-a-tool-for-private-capital-disputes), International Arbitration in 2025, January 2025.
4. Feldman and Chunduru, [Why Many M&A Deals Fail – and How to Beat the Odds] (https://knowledge.wharton.upenn.edu/article/why-many-ma-deals-fail-and-how-to-beat-the-odds), Knowledge at Wharton, December 2025.
5. Andrew Grantham, Kai Schumacher, and Greg Huitson-Little, AlixPartners, [The Role of the Quantum Expert in M&A Disputes] (https://www.alixpartners.com/media/13947/the-role-of-the-quantum-expert-in-ma-disputes.pdf), in *The Guide to M&A Arbitration*, Law Business Research, 2020.
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