April 7, 2017

Survey: Middle-Market Private Deal Terms

Seyfarth Shaw recently published the 2017 edition of its “Middle Market M&A SurveyBook”, which analyzes key contractual terms for more than 150 middle-market private target deals signed in 2016.  The survey focuses on escrow arrangements, survival of reps & warranties, and indemnity terms and conditions.  Here’s a summary of some of the survey’s conclusions:

The data analyzed in this Survey suggests that while the current M&A environment is still trending to be more favorable to sellers as has been the case over the past two years, there are indications to suggest that certain terms are slightly less seller favorable than 2015. For example, our Survey data shows an increase in the median escrow period, an increase in the number of deals with an indemnity escrow amount of 10% or more, an increase in the median escrow amount, and an increase in the use of tipping baskets as opposed to a true deductible.

Competition among buyers for quality deals remain fierce, and the survey notes the continuing role of rep & warranty insurance in making a buyer’s proposal more competitive.

John Jenkins