DealLawyers.com Blog

The ABA’s Mergers & Acquisitions Committee recently released its “2016 Strategic Buyer/Public Target Deal Points Study.”  Here are just some interesting findings:

– While 100% of Merger Agreements called for the reps & warranties to be accurate at the closing, only 80% called for them to be accurate at signing.

– 98% of deals surveyed gauged the accuracy of reps & warranties by reference to whether their failure to be accurate would result in a Material Adverse Effect, up from 93% in the prior year.

– 95% of deals surveyed had a “double materiality” carve out, that called for disregarding materiality qualifiers in individual reps & warranties when assessing their accuracy at closing.

– Only 1% of deals surveyed had language that included an adverse change in the seller’s “prospects” within the definition of an MAE, but 69% included any event that would create a prohibition, material impediment, or material delay in the consummation by the seller of the merger within the definition.

– Only 23% of the deals surveyed had language conditioning the deal on the absence of litigation challenging the transaction by a governmental authority.  Not a single deal was conditioned on the absence of private litigation challenging the transaction.

There’s lots more where this came from.  As always, the Deal Points Study will give you something to talk about aside from politics & the NFL playoffs at your next practice group lunch.

– John Jenkins