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2025 ABA Private Target M&A Deal Points Study: What's Market?

May 6, 2026

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The ABA Private Target Mergers & Acquisitions Deal Points Study is published on a bi-annual basis. The 2025 Deal Points Study (the “Study”) analyzed 139 publicly available purchase agreements executed and closed in 2024 and the first quarter of 2025.

The Study looks at several areas of negotiation, including financial terms, pervasive qualifiers, representations and warranties, covenants, closing conditions, indemnification provisions and representations and warranties insurance. The wide range of topics covered is one reason the ABA report is particularly useful to practitioners. The Study has become a widely respected source for what terms are currently considered market.

The benchmark for what is “market” shifts and adapts to the economic circumstances each year. This constant evolution makes it important to publish updates to the Study on a bi-annual basis and enables the Study to reflect trends by tracking the shifts over time.

Goulston & Storrs has identified several key trends of note and a few new data points that have been added to this year’s Study. The most significant trends and changes we have identified are briefly described below.

Purchase Price Adjustment Escrows

A separate escrow account in which to holdback of a portion of the purchase price at closing, to be used to settle the post-closing purchase price adjustment is now seen in about 58% of deals. This is an increase from the 53% seen in the prior publication and the highest percentage reported since the Study began tracking this metric in 2006. Additionally, 42% of the acquisition agreements with adjustment escrows specify that the adjustment escrow is the sole source of recovery for the post-closing purchase price adjustment. This trend towards using the escrow as the sole recourse for purchase price adjustments has risen steadily from 11% in 2017 (when this metric was first tracked).

Representation and Warranty Insurance (RWI)

There has been a market-wide trend towards obtaining RWI over the past several years. The Study shows that 63% of the deals in the 2025 Study included references to RWI. This is up significantly from 29% when the Study first included this metric in the report in 2017. Additionally, of the acquisition agreements with references to RWI, the Study saw an increase in deals in which the RWI policy is the sole source of recovery for breaches of representations and warranties, at 46%. This is a growing trend, though down slightly from the prior study’s 49%, but up significantly from only 14% in 2018-19. In addition, 28% of deals included RWI as the sole source of recovery for breaches of non-fundamental representations and warranties.

Indemnity Caps

This year the Study includes additional data points to show RWI correlations in provisions that are materially affected by the presence of RWI. This is particularly evident in the indemnity provisions. It is common for parties to cap the potential liabilities of sellers for breaches of general representations and warranties. The central negotiation around this point is what amount is appropriate for the cap. There has been a notable uptick in the size of the indemnity cap as a percentage of transaction value since 2021, presumably as a result of the private company M&A market becoming more “buyer friendly.” As a result, the Study shows an increase in the mean for the indemnity cap as a percentage of transaction value from just over 6% in 2021 to almost 16.79% in 2025.

Materiality Scrapes

Since the 2005 publication in which only 14% of the deals included a materiality scrape, the usage of the materiality scrape has significantly and regularly increased (with one notable exception in 2013), jumping to 70% of deals in 2015 and peaking at 93% in 2019. While the prior two studies showed a slight decrease in the prevalence of a materiality scrape, it was still present in 87% of the acquisition agreements included in the Study.

Knowledge Qualifiers

In qualifying representations and warranties by the knowledge of the seller, buyers prefer a “constructive knowledge” formulation (i.e. the knowledge a person would reasonably be expected to obtain with due inquiry), while sellers prefer an “actual knowledge” standard. According to the 2025 Study, 90% of the deals utilized a constructive knowledge formulation. The use of constructive knowledge rather than actual knowledge has increased fairly regularly year over year and is now in almost all of the deals, with some variation in how constructive knowledge is defined.

10b-5 Representations

The 2025 Study shows a pronounced decline in the presence of 10b-5 and full disclosure representations in private M&A transactions. Inclusion of 10b-5 acquisition agreements has steadily decreased from a peak of 67% in the 2009 publication to a low of just 5% of the deals in the current Study. Additionally, a full disclosure representation is virtually never made as a standalone representation in the absence of a 10b-5 representation. Rather, if a full disclosure representation is made, it is only made in conjunction with a 10b-5 representation.

Silence on Sandbagging

A pro-sandbagging provision permits a buyer to recover indemnification for breaches the buyer was aware of prior to closing a transaction. In contrast, an anti-sandbagging provision expressly prohibits a buyer from recovering losses in connection with breaches the buyer knew of prior to closing. The compromise position between these two positions is to be silent on the issue (which is by default more in line with permitting sandbagging as a result of not expressly prohibiting recovery). The Study reports that 69% of deals followed the compromise position of remaining silent, up significantly from 39% in 2004. This also reflects an RWI correlation, with the deals that included RWI references making up most of the deals that were silent on this point. Additionally, the Study shows that 28% of deals included pro-sandbagging provisions. Anti-sandbagging provisions continue to be uncommon, appearing in just 4% of the Study deals.

Damage Mitigation Provisions

A seller may include a provision in the indemnification section of the acquisition agreement requiring to the buyer make an effort to mitigate the damages in connection with an indemnifiable loss. The inclusion of such a damage mitigation provision, expressly requiring the buyer to take steps to mitigate losses, has increased significantly — from 22% in 2007 to a high of 69% in 2023. The current Study showed a slight drop-off, to 56%.

Types of Damages Recoverable

Sellers will often negotiate to expressly exclude certain types of damages from the damages sellers are indemnifying for in the acquisition agreement. Potential exclusions include incidental, punitive and consequential damages, among others. According to the 2025 Study (i) incidental damages were expressly excluded in 19% of the deals and the agreements were silent in 77% of deals, (ii) punitive damages were excluded in 69% of deals and the agreements were silent in 31% of deals, and (iii) consequential damages were expressly excluded in 23% of deals and the agreements were silent in 71% of deals. Of note, however, is that within the category of “expressly excluded” the Study includes provisions that have an exception from the exclusion for damages actually paid to a third party.

Indemnification as Exclusive Remedy

The Study shows that acquisition agreements commonly include a provision stating that the indemnification provisions are the exclusive remedy for claims in connection with the transaction, with such a provision being included in 89% of the deals in the 2025 Study. Within the exclusive remedy provision, the Study looks at whether fraud is carved out and whether fraud is defined in any way. The Study shows that a fraud carve out is present in 85% of the agreements with this provision. In deals including a fraud carve-out, there has been a trend towards defining fraud with some specificity, often limiting the carve-out to actual or intentional fraud.

Each of the foregoing key takeaways and new data points from the Study reflect trends in the markets that have developed over the past several years due to particular demands and changes in the M&A industry as a result of changing economies and priorities. We look at the reasons and effects of these developments in more depth in a series of short, focused articles on BloombergLaw.com. Explore the articles here:

Purchase Price Adjustment Escrows

Representations and Warranties Insurance

Indemnity Caps

Materiality Scrapes

Knowledge Qualifiers

10b-5 and Full Disclosure Representations

Sandbagging Provisions

Damage Mitigation Provisions

Exclusion of Consequential Damages

Indemnification as an Exclusive Remedy

Earnout Provisions

Target Legal Opinions

Waiver of Jury Trials