April 6, 2006
Annual Deal Points Study
Conducted since 1999, the Annual Deal Points Study is now available for ABA members. Published for the first time under the auspices of the ABA, the study is split into public and private targets. [I have pushed this study since way back when I was editor of The M&A Lawyer; it’s a great piece and I will get Wilson and Larry on a podcast soon as you may find some of the statistics surprising. Here’s an interview with them regarding the results of an older study.]
The Public Target Deal Points Study examines 97 transactions with transaction values greater than or equal to $100 million in 2004 based on information from LivEdgar (of which 7 were tender offers), plus two additional tender offer transactions with transaction values of less than $100 million. The study looks at percentages of transactions that included certain provisions or variations on certain types of provisions in the context of public company transactions including:
1. Target Reps and Warranties (e.g., financial statements – fair presentation; no undisclosed liabilities; full disclosure)
2. Closing Conditions and Termination Rights (e.g., accuracy of target reps; no MAC; legal opinions; retention of employees, no governmental litigation; no non-governmental litigation; resignation of directors; availability of financing; decrease in buyer’s stock price)
3. Deal Protection (e.g., fiduciary out to no-talk; fiduciary out to board recommendation; fiduciary/superior proposal termination right; breakup fee triggers)
4. Other data (D&O indemnification and insurance)
5. Tender offer data
[Note: The Public Target Deal Points Study didn’t look at acquisitions by private equity buyers.]
The Private Target Deal Points Study examines 128 transactions with transaction values between $25 million and $2.5 billion completed in 2004 based on information from LivEdgar, of which 59% were all cash, 11% were all stock and 30% involved mixed consideration. In addition, 16% signed and closed immediately. The study looks at percentages of transactions that included certain provisions or variations on certain types of provisions in the context of private company transactions including:
1. Target Reps and Warranties (e.g., SOX-influenced representations; no undisclosed liabilities; full disclosure)
2. Conditions to Closing (e.g., accuracy of Target reps; no MAC; legal opinions)
3. Knowledge qualifiers
4. Indemnification (e.g., sandbagging; survival of reps and warranties; baskets; caps; exclusive remedy; escrows)