A Global Guide for In-House Counsel: Doing business in a rapidly changing world


ESG & Dealmaking – Deal Activity in 2023

Post-Covid operational changes have affected the M&A due diligence process – what steps should businesses be taking to formalise these changes and avoid unexpected headaches during the deal process?

The Covid-19 pandemic represented an unprecedented disruptive event, both in the respect of personal and social relationships, as well as in the operation, management and preservation of corporations. It has had a significant effect on companies and their operations, including mergers and acquisitions (M&A), financing, securities market, and contractual and commercial agreements.

An increasing number of investors see ESG as a fundamental driver of financial success. However, in a post-covid period of “greenwashing” where every business self-assesses itself as ESG and sustainable, these ESG key performance indicators merit a closer analysis during the due diligence.

There has been much discussion and even litigation at an international level regarding MAE clauses during the pandemic. This clause typically gives the buyer the right to terminate a purchase or association transaction prior to closing, upon the occurrence of an event or circumstance that has a material adverse effect on the financial or business condition of the target company. A detailed analysis of the MAE clause, as well as the particular impact on the company, is required to determine if a different material adverse effect may have occurred.

Companies will likely do everything that they can to cover themselves for either another pandemic or a future crisis. Strengthened internal audit processes in preparation of due diligence, new amendments, emergency planning procedures, insurance quotes and cancellation options could suddenly become commonplace in the most straightforward of agreements.

M&A deals are increasingly using digital tools to streamline and enable faster international deal-making. Does this present any risks to the process in your jurisdiction?

M&A is a complex, challenging combination of the right capital, transaction strategy and effective deal execution to drive value. The future of M&A dealmaking means significantly more information needs to be captured, processed, analysed and interpreted than ever before. Traditional means are no longer effective in delivering a competitive edge. At the heart of providing greater transparency lies technology, with digital tools seen as playing a major role in the industry. Digital capabilities can streamline M&A activities in several ways. Doing business in an increasingly international and remote digital world requires collaboration tools to meet and negotiate online. Other digital tools can assess the perception and market recognition of the target.

Virtual data room

Virtual data rooms are omnipresent in M&A deals to gather documents and ensure that they are fully complete, including all exhibits, schedules, and amendments. They provide a secure online environment in which team members who are not co-located can nonetheless review the increasingly voluminous amount of data associated with potential targets. The introduction of virtual data rooms, allowing vast amounts of documentation to be uploaded instantly into a secure, online environment, accessible to multiple viewers at any one time and providing sophisticated searchable functionality, has been a positive technological development in the M&A process and has become the standard approach to managing the due diligence element of any deal.

Electronic signatures

Belgian law recognises electronic signatures as legal and enforceable and, under certain limited conditions, they are fully assimilated to wet ink signatures. However, for critical or disputed decisions or important documents with third parties, especially abroad, a wet ink signature (or a qualified electronic signature) is still recommended. A signing and/or closing process may become delayed due to the signature collection. It is therefore important to collect wet ink signatures sufficiently in advance.


In case of a cross-border transaction, it may be recommended to have the purchase price wired to the purchaser’s counsel third party account in order to swiftly wire these funds. Parties or their legal counsels are also advised to liaise with their banks in order to have the wiring of the purchase price prepared in advance and to ensure that they can issue a simultaneous confirmation of receipt of the purchase price payment. The signing of the shareholders’ register, which is the only valid proof of title under Belgian law, must be organised in advance. In times where closings are in many cases virtual, only counsel will have to meet to sign and exchange the share register.

Businesses need to be adaptive to thrive in our fast-paced world: how is the M&A process changing to facilitate more adaptive, changeable ways of doing business?


Integration is a highly complex activity given that every acquisition is unique and the progression of integration depends on a number of dynamic variables. Integration should not take place on a one-size-fits-all approach. A team with empowered representatives from every function and entity is also more likely to respond and make changes based on evolving situations, thereby increasing the chances of successful integration.

Deal strategy

Covid-19 has influenced how parties to a transaction may wish to structure their M&A transactions. Rather than buying or selling 100% of a company, the parties to a transaction may decide to share the risk on valuation by dealing with a stake in the company instead. The deal may also be structured to allow the purchaser to obtain full control of the business in due course and to allow the seller a full exit.. A possible alternative to acquiring a minority stake in ordinary shares would be to structure the transaction using a different capital instrument, such as a preference or convertible share.

Warranty and indemnity insurance

One of the most heavily negotiated matters in acquisitions is the indemnification rules. While a seller agrees to a number of representations and warranties, these cannot be relied on indefinitely. They may be time-barred, or made subject to caps, de-minimis clauses or baskets. Apart from this, certain specific indemnities may be agreed on which form an exemption to these rules. W&I insurance will likely become more prevalent in our fast-paced world as this solution becomes more and more known, resulting in the need to recalibrate the view on market norms and the balance of risk between buyer and seller.