DealLawyers.com Blog

December 6, 2016

Why Are M&A Docs Getting Longer? It’s Complicated. . .

This Norton Rose Fulbright blog discusses the findings of a recent study by Harvard Law professor – & former Wachtell partner – John Coates about the ever growing length of merger agreements. Coates’ study notes that merger agreements have more than doubled in length over the past 20 years.  Here’s an excerpt from the blog summarizing Coates’ conclusions about the reasons for the supersizing of deal documents:

Coates argues that the changes stem mainly from an increased appreciation of both relevant legal risks and changes in deal and financing markets and not from parties seeking to “grandstand” by adding provisions without significant content. Such provisions include sections addressing, for instance, financing conditions, reverse termination fees, specific performance, dilution, unlawful payments, and forum selection. As Coates writes, these kinds of provisions “represent rational responses by deal participants to a changed deal environment.”

In other words, documents have become lengthier because the M&A process continues to evolve and become more complex, and because dealmakers have improved their understanding of the risks associated with that process.

John Jenkins