2023 Insights: A Possible Recession

Skadden’s 2023 Insights

US M&A Levels Remain Healthy, but Due Diligence and Deal Protections Will Become Even More Critical
High corporate cash levels and private equity dry powder, combined with corporations’ strategic needs, should sustain U.S. M&A activity. Uncertainties about markets and regulators will make robust due diligence and negotiation critical.

The Widely Forecast Recession in the UK Will Likely Reshape M&A
The economic slowdown in the U.K. will likely lead to some distressed sales and possibly attractive targets for U.S. buyers. In some cases, potentially contentious deferred and contingent payment terms may have to be used to reach a deal.

Focus of China Cross-Border M&A Turns to Government-Favored Sectors and Away From West
A slowing economy, volatile stock prices, trade tensions and new regulations have slowed cross-border Chinese M&A and prompted buyers to focus on sectors favored by government policy. But financial buyers have dry powder and remain active.

A Playbook for Borrowers Facing Economic and Debt Market Pressures
Years of borrower-friendly debt terms and covenant-lite structures provide companies with options during an economic downturn. But some transactions have sparked litigation, and securities laws must be observed if bond debt is involved.

UK-Listed Issuers Under Financial Stress Gain Latitude in Secondary Capital Raisings
In the face of economic challenges, issuers listed in the U.K. should pay close attention to updated guidance on secondary capital raisings as well as to their disclosure obligations.

HKEX Initiatives Present Opportunities Even in a Down Market
In a bid to make itself more competitive, HKEX has eased the path for dual primary and secondary listings and SPAC listings, and now proposes to admit some early-stage technology companies that have little or no revenue.

Reductions in Force: Legal Do’s and Don’ts
Grappling with the potential risks of an economic downturn, employers should familiarize themselves with the legal and practical considerations involved in implementing a reduction in force.

How Directors Can Manage the UK Supreme Court’s ‘Balancing Exercise’ in Difficult Times
The U.K. Supreme Court recently held that directors may be required to consider creditors’ interests as well as shareholders’ if a company is near insolvency. A few simple principles should guide boards in fulfilling their obligations.

Enforcement Priorities Could Shift in a Downturn
In downturns, enforcement agencies often prioritize high-risk sectors, transparency, consumer protection and individual accountability. ESG issues, geopolitical tensions and the pandemic may also shape upcoming enforcement efforts.

Convertible Notes, Accelerated Share Repurchases and Other Equity-Linked Instruments: Challenges and Opportunities in 2023
Equity-linked instruments have been significantly affected by the changing market environment. Convertible debt issuers, companies looking to repurchase shares and sizable shareholders should consider whether to act now.

See all of Skadden’s 2023 Insights

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