The Impact of Transaction Size on Highly Negotiated M&A Deal Points

摘要

When negotiating mergers or acquisitions, deal lawyers will often support their position by asserting that it is in accord with the "market" based on published deal points studies. However, as many of these lawyers intuit based on their experience, terms vary across the market based on a number of factors including deal size, a factor that no previously published study has examined or accounted for. This article confirms that intuition by surveying the middle market at deal sizes from several million to several billion dollars and showing, for the first time, that highly negotiated deal points tend to become more seller favorable as transaction value increases. This conclusion is based on a review offive terms (liability cap, liability basket amount and type, sellers' catch all representations, the "no undisclosed liabilities" representation, and closing conditions) across 849 deals from 2007 to 2015, a sample larger than that used in any previously published deal points study of mergers and acquisitions.