Mediation is a process conducted confidentially that involves the parties in dispute nominating a neutral third party (a facilitator) to actively assist them in working towards a mutually beneficial arrangement (with a view to avoiding a trial). The parties are ultimately in control of the decision to settle and the terms of the resolution. The facilitator is not a decision-maker; he/she merely helps the parties to examine the problems. 

Advantages

• Cost and time: mediation is a cheap and relatively quick method of dispute resolution.
• Preserving relationships: the informal nature of mediation and focus on cooperation means it is an efficient form of dispute resolution in terms of preserving business relationships between the parties. 
• Confidentiality: the courts are not involved in mediation, so all discussions can take place in/remain private.
• Without prejudice: discussions held throughout the mediation process are “without prejudice”, meaning they will not be admissible in court should the mediation fail and the parties proceed to trial.

Disadvantages

• No precedent: settlements/solutions resulting from mediation will not provide legal precedent for future disputes, meaning mediation does not contribute to the prevention/resolution of future disputes.
• Commitment: mediation will only be appropriate/effective if both parties genuinely intend to resolve the dispute out of court.
• Complexity: if the case involves complex legal or factual issues, mediation may not be appropriate.
• Uncertainty: there is no guarantee that the parties will find a solution, so mediation could turn out to be a waste of time and money.

The privacy afforded by mediation aligns with the parties' desire to avoid having to disclose confidential information. However, given that the dispute in question is complex, and has escalated to the point where the parties seem unable to maintain a cordial working relationship, there's a chance that the lack of an expert adjudicator and the informal nature of mediation would make it a less effective means of resolving the dispute.

Note that our M&A course explains the types of risks that can arise in relation to transactions, and the mechanisms lawyers can use to mitigate these risks.