American Bar Association Releases 2017 Deal Points Study

The American Bar Association Mergers & Acquisitions Committee has released its Private Target Mergers & Acquisitions Deal Points Study. The new study includes transactions through the first half of 2017. The study gives many benchmarks for commonly negotiated terms in private transactions. The study also shows some trends that indicate sellers recently have more negotiating leverage. This is more evidence we are in a middle market seller’s market (and may have crested).

• Legal opinions of the target counsel were only required in 7% of transactions in 2016-17, down from 30% in 2006.
• Indemnity caps in 2016-17 were down to a mean of 12.20% and median of 8.40%, down from a mean of 18.88% and median of 10.00% in 2010.
• Escrows/Holdbacks in 2016-17 were down to a mean of 6.66% and median of 7.00%, down from a mean of 9.14% and median of 7.50% in 2014.

The Deal Points Study is a useful tool for counsel and clients to evaluate the market trends in the terms of private transactions. The study can be used to gain consensus on difficult issues and also to evaluate the allocation of risk between a buyer and seller that can be expected in a transaction.

Andrew J. Miller, JD, CM&AA® advises buyers and seller of main street and middle market companies in private mergers and acquisitions. He is recognized as a Certified Mergers & Acquisitions Advisor® by the Alliance of Mergers & Acquisitions Advisors, an organization focused on the private middle market. He can be reached at (717) 845-1524, or amiller@mpl-law.com.