The 2019 Private Target Mergers & Acquisitions Deal Points Study was recently released by the Business Law Section of the American Bar Association. Copies of the study are available to ABA members on the ABA website, click here.
The study is the diligent work of the Market Trends Subcommittee of the Mergers and Acquisitions Committee and is published on a bi-annual basis. Attorneys, investment bankers and other advisors routinely refer to the study for trends in key legal issues that are prevalent in negotiated acquisitions of privately held companies in the United States. The 2019 version of the study analyzes a greater number of transactions at 151 M&A deals that were executed or closed during calendar year 2018 and the first quarter of 2019 with transaction values ranging from $17 million to $500 million. It also contains new data point references on matters such as the inclusion of #metoo, cybersecurity and data privacy representations and the impact of representations and warranties insurance on indemnification provisions. These new data points are flagged for the reader.
Notable highlights are: (i) a greater number of transactions using post-closing adjustment mechanisms, 95% in 2019 as compared to 86% in 2017, (ii) a greater number of transactions with no survival period for non-fundamental representations, 14% in 2019 as compared to 7% in 2017, (iii) a decrease in the average cap on seller’s indemnification obligations, at 8.99% of transaction value in 2019, due in part to the rise of representations and warranties insurance, (iv) a greater number of transactions using representations and warranties insurance, 52% in 2019 as compared to 29% in 2017, and (v) decreasing reliance on the representations and warranties insurance and escrows as the sole remedy for breaches of fundamental representations.
If you have questions about the study or about market trends in M&A transactions you might be involved with, please contact Nina Skinner.
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