Published by Gbaf News
Posted on March 31, 2017
Leading law firm Seyfarth Shaw LLP has published the fourth edition of its Middle-Market M&A SurveyBook of Key M&A Deal Terms (the “Survey”). The Survey analyzes over 150 middle-market (<$1 billion) publicly available private target acquisition agreements signed in 2016.
The Survey focuses on the key deal terms comprising the “indemnity package” often included in private target acquisition agreements to address the issue of a seller’s potential post-closing liability to a buyer and defining the scope by which the purchase price paid to a seller may be clawed back by a buyer.
The data analyzed in the Survey suggests that while the current M&A environment is still trending to be more favorable to sellers as has been the case over the past two years, there are indications to suggest that certain terms are slightly less seller favorable than in 2015. As evidence, the Survey data revealed an increase in the median escrow period, an increase in the number of deals with an indemnity escrow amount of 10% or more, an increase in the median escrow amount, and an increase in the use of tipping baskets as opposed to a true deductible.
The competition among buyers searching to acquire quality assets continues to be fierce and the purchase of representation and warranty insurance continues to be a powerful tool used by buyers in an effort to make their acquisition proposal more attractive to a seller by significantly limiting potential post-closing liability of the seller.
While the Survey summarizes a variety of deal terms and trends in middle-market M&A transactions, below are several key takeaways:
To view Seyfarth’s 2017 Middle-Market M&A SurveyBook, please visit here.
Leading law firm Seyfarth Shaw LLP has published the fourth edition of its Middle-Market M&A SurveyBook of Key M&A Deal Terms (the “Survey”). The Survey analyzes over 150 middle-market (<$1 billion) publicly available private target acquisition agreements signed in 2016.
The Survey focuses on the key deal terms comprising the “indemnity package” often included in private target acquisition agreements to address the issue of a seller’s potential post-closing liability to a buyer and defining the scope by which the purchase price paid to a seller may be clawed back by a buyer.
The data analyzed in the Survey suggests that while the current M&A environment is still trending to be more favorable to sellers as has been the case over the past two years, there are indications to suggest that certain terms are slightly less seller favorable than in 2015. As evidence, the Survey data revealed an increase in the median escrow period, an increase in the number of deals with an indemnity escrow amount of 10% or more, an increase in the median escrow amount, and an increase in the use of tipping baskets as opposed to a true deductible.
The competition among buyers searching to acquire quality assets continues to be fierce and the purchase of representation and warranty insurance continues to be a powerful tool used by buyers in an effort to make their acquisition proposal more attractive to a seller by significantly limiting potential post-closing liability of the seller.
While the Survey summarizes a variety of deal terms and trends in middle-market M&A transactions, below are several key takeaways:
To view Seyfarth’s 2017 Middle-Market M&A SurveyBook, please visit here.
