Seller-Favorable Deal Environment Persists According to Seyfarth’s Middle-Market M&A Survey

Leading law firm Seyfarth Shaw LLP has published the 5th edition of its Middle-Market M&A SurveyBook of Key M&A Deal Terms (the “Survey”). The Survey analyzes over 120 middle-market (<$1 billion) publicly available private target acquisition agreements signed in 2017.

The Survey focuses on key deal terms comprising the “indemnity package” included in almost all private target acquisition agreements to address a seller’s potential post-closing liability to a buyer, and set the parameters of a buyer’s ability to claw back purchase price from a seller.

The data analyzed in this Survey suggests that, similar to the trend of recent years, the environment for private target middle-market M&A continues to be seller friendly. The purchase of representation and warranty (“R&W”) insurance continues to be a powerful tool used by buyers to make their acquisition proposal more attractive, and this year’s data indicated a significant increase in deals using R&W insurance. Of course, the terms of the typical indemnity package are greatly impacted when R&W insurance is utilized. For example, the indemnity escrow amount and indemnity cap size are typically drastically lower in transactions using R&W insurance as compared to transactions that do not use such insurance. Accordingly, Seyfarth’s Survey highlights the impact of R&W insurance on certain deal terms and separately addresses the results for deals not utilizing R&W insurance.

In deals not using R&W insurance, this year’s Survey showed consistency with prior years for a number of deal terms with the general representation and warranty survival periods holding steady in the 12 -18 month range, continued high usage of true deductible indemnity baskets, and a median indemnity cap size of 10% of purchase price. To view Seyfarth’s 2018 Middle-Market M&A SurveyBook, please visit here.


Subscribe to the Global Banking & Finance Review Newsletter for FREE
Get Access to Exclusive Reports to Save Time & Money

By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.