M&A Trend Spotting: Evolving Insurance Coverage in Private Equity Transactions
Partnership with HUB InternationalGoulston & Storrs partners with HUB International, a Chicago-based leading full-service global insurance broker, to provide this blog series. Q. What are some of the insurance industry trends you are seeing in relation to Private Equity Transactions? I would say the market, overall, is now embracing secondary transactions in a much...
Representations & Warranty Insurance
Published by Bloomberg LawMarket Trends: What You Need to Know RWI is an increasingly important feature of private company M&A transactions. Every other year since 2005 the ABA has released its Private Target Mergers and Acquisitions Deal Point Studies (the “ABA studies”). The most recent two of these studies (2017 and 2019...
Indemnity Escrows
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Indemnity escrows are consistently seen in 75% or more of reported transactions. The level of indemnity baskets as a percentage of transaction value, whether as mean or...
Indemnity Baskets
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Over the time period covered by the eight studies (2005-2019), the level of indemnity baskets as a percentage of transaction value, whether as mean or median, has...
Indemnity Caps
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Over the eight ABA studies (2005-2019), indemnity caps have declined as a percentage of transaction value (whether as mean or median). This decline has been fairly consistent...
After-Tax Indemnity Limitations
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Since 2011, the use of after-tax indemnity limitations has steadily decreased, appearing in 32% of deals reviewed in the 2019 study. Notwithstanding potentially limited economic benefits of...
Separate Escrows for Purchase Price Adjustments
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: The use of separate escrows for purchase price adjustments has been increasing on a steady basis since 2007. Separate purchase price adjustment escrows are now becoming the...
Earnout Provisions
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Earnout provisions were included in 27% of the deals reported in the 2019 study. The previous six studies noted inclusion of earnout provisions in 28%, 26%, 25...
Insurance Reduction Provisions
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Insurance reduction provisions were included in 90% of the merger and acquisition (“M&A”) deals reported in the 2019 study. Over the past 12 or so years covered...
Exclusion of Consequential Damages
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Only 2% to 9% of the merger and acquisition purchase agreements covered by the studies expressly included consequential damages within the scope of indemnified losses 26% to...
Non-Reliance and NOR Provisions
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Express non-reliance provisions are increasingly common in merger and acquisition transactions, and have tripled in prevalence over the six ABA studies since 2009. These provisions have become...
Damage Mitigation Provisions
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Inclusion of damage mitigation provisions in merger and acquisition agreements continue to trend upward over the seven ABA studies looking at these provisions. Damage mitigation provisions were...
Compliance with Laws Representations
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Compliance with laws representations are almost always, barring highly unusual circumstances, present in merger and acquisition (M&A) purchase agreements; i.e., these representations are seen in 98%-100% of...
Alternative Dispute Resolution Provisions
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Overall, alternative dispute resolution provisions are becoming less common in private company merger and acquisition (M&A) transactions. Inclusion of ADR provisions has declined over the past several...
10b-5 and Full Disclosure Representations
Published by Bloomberg LawMarket Trends: What You Need to Know As shown in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Inclusion of either 10b-5 or “full disclosure” representations in merger and acquisition purchase agreements is becoming less common, declining from a peak of 67% in the 2009...
No Undisclosed Liabilities Representations
Published by Bloomberg LawMarket Trends: What You Need to Know As reflected in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Mergers and acquisitions (M&A) purchase agreements almost universally include a “no undisclosed liabilities” (NUL) representation. Specifically, across the eight ABA studies, an NUL representation was included in...
Use of Knowledge Qualifiers for Representations and Warranties
Published by Bloomberg LawMarket Trends: What You Need to Know As reflected in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: “Knowledge” is now almost always defined in private company transaction agreements. For example, in the 2019 study only 1% of the reported deals left knowledge undefined. The...
Waiver of Jury Trials
Published by Bloomberg LawMarket Trends: What You Need to Know As reflected in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies, over the past twelve or so years, inclusion of jury trial waivers in mergers and acquisitions (M&A) agreements has increased from 50% of reported transactions in the...
Financial Statement Reps
Published by Bloomberg LawMarket Trends: What You Need to Know According to the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies, financial statement representations are universally required from sellers in private company M&A deals, included in 100% of transactions covered by the most recent study in 2019. Prior ABA...
Indemnification as an Exclusive Remedy
Published by Bloomberg LawMarket Trends: What You Need to Know As reflected in the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Over the time period covered by the eight ABA studies (2005-2019), the inclusion of exclusivity of remedies (EOR) provisions has become commonplace: included within 76% to 95...
Purchase Price Adjustments
Published by Bloomberg LawMarket Trends: What You Need to Know Based on the American Bar Association's Private Target Mergers and Acquisitions Deal Point Studies: Purchase price adjustments continue to be commonplace in M&A agreements. In the 2019 study, they were included in 95% of reported deals. Working capital is the most common...
Sandbagging Provisions
Published by Bloomberg LawMarket Trends: What You Need to Know “Sandbagging” concepts are often the subject of intense negotiation in M&A transactions. Inclusion of pro-sandbagging clauses within M&A purchase agreements has been on the decline, and more often, the parties are deciding instead to be silent on the issue of sandbagging. Introduction...
Stand-Alone Indemnities
Published by Bloomberg LawMarket Trends: What You Need to Know According to the American Bar Association's eight Private Target Mergers and Acquisitions Deal Point Studies, the use of stand-alone indemnities in reported private company M&A transactions has increased from 69% in its 2007 study to 95% in 2019. This article examines the...
Target Counsel Legal Opinions
Published by Bloomberg LawMarket Trends: What You Need to Know One of the most pronounced practice-related trends in private company merger and acquisition transactions is the near-disappearance of target legal opinions as a closing deliverable. Though they were not long ago a common closing condition, target legal opinions have pretty much gone...
The ‘Materiality Scrape’ Provision
Published by Bloomberg LawMarket Trends: What You Need to Know Over the past almost 15 years covered by the ABA studies, materiality scrapes have morphed from being a somewhat uncommon provision, seen in about 14% of transactions in 2005, to something near-ubiquitous in M&A purchase agreements, now included in 93% of transactions...
Trends in M&A Provisions: Disclosure Schedule Updating
Published by Bloomberg LawMarket Trends: What You Need to Know Over the past several years, an express right, or obligation, of sellers to update disclosure schedules between signing and closing is becoming less common. Instead, more M&A agreements are staying silent on the point. In addition, where disclosure schedule updating is contemplated...
Evolving Private Company M&A Considerations in the COVID-19 Era
Introduction The virus that causes COVID-19 has ushered in unprecedented times for our country and our global community. Certainly, the pandemic is impacting the way M&A transactions are looked at, papered, implemented, and even priced. This article identifies some of the higher-level, pandemic-related considerations evolving in the private company...
COVID Impact as a Standalone Indemnity in M&A Transactions
Introduction The COVID virus has ushered in unprecedented and challenging times for our country and the global community. From the deeply personal pain and suffering caused by the virus as a health pandemic to behavioral adjustments in the consumer population at large (“social distancing,” etc.), to every day, but very...
COVID and M&A Earnouts
The COVID-19 virus has ushered in unprecedented and challenging times for our country and our global community. From the deeply personal pain and suffering caused by the virus as a health pandemic to behavioral adjustments in the consumer population at large (“social distancing,” etc.), to our everyday routines, burdens...
Crain's Ask the Expert: Exploring the M&A Landscape
Click Here to View the Original PDF from Crain's New York 2019 was a busy year in the mergers and acquisitions world, with both private equity firms and strategic buyers looking for deals in an environment shaped by tax reform, a looser regulatory climate and increased cash reserves at...
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