
Liabilities vs. Litigation Risks in M&A Deals
Liabilities and litigation risks both shape how an M&A deal is priced, financed, and structured, but they behave very differently. Liabilities are known, quantifiable obligations—like debt, taxes, leases, or accrued benefits—that usually show up on financial statements and can be modeled directly into cash flow. Litigation risks, by contrast, stem from actual or potential disputes and regulatory actions that may never materialize, but if they do, can create unpredictable costs, delays, and lender concerns that need to be managed through due diligence, deal structure, indemnities, escrows, and insurance.











