By Éanna Mellett and Matthew Cole, Partners in DLA Piper
- Does an auction actually drive better terms for sellers?
- What are the most common deal types and processes?
- How has the pandemic impacted on deal terms?
Global M&A Intelligence Report
DLA Piper has released its latest annual Global M&A Intelligence Report which answers these and other key questions. The Report is based on an analysis of key deal terms in over 3,200 DLA Piper private M&A transactions over the last seven years.
2020 was the seventh year covered by DLA Piper’s series of M&A Reports and it was, without doubt, a year of the greatest extremes. For the first half, COVID-19 dominated. It affected deal terms, although not in quite the same way as some commentators so confidently predicted at the outset.
In the second half of 2020, the M&A market roared back and, again, the buyer/seller balance shifted and terms changed. Meanwhile, some underlying themes continued – the growth of warranty and indemnity insurance, and the striking difference between different geographical markets.
The mix of deal types in 2020 stayed broadly the same as previous years. The 2020 M&A market did not see the widely predicted increase in asset deals. Many expected this in anticipation of a significant rise in distressed M&A, whereas in many jurisdictions government support and intervention on an unprecedented scale meant that far fewer businesses became insolvent than commentators thought. It will be interesting to see how this plays out in the coming months as government support packages unwind in most jurisdictions.
Overall, there was a slight reduction in auctions in 2020. Locked box mechanisms were prevalent in auctions, being used in two-thirds of the 2020 auction deals surveyed, and completion accounts continued to be the favoured pricing mechanism globally, heavily influenced by the continued prevalence of completion accounts in non-European deals.
In uncertain times, buyers and sellers have looked for greater deal certainty and this trend continued through the remainder of 2020.
Not surprisingly, the use of M&A insurance remained an important facet of the private M&A market.
It remains as true as ever that we transact in a multitude of markets when it comes to terms – what is market for US trade compared to French private equity is very different.
Significant M&A transactions are always a big step for buyers and sellers, and there is even more to consider in a market shrouded in uncertainty. Parties need good advisors who understand their business objectives and the markets in which they operate.
You can get your copy of the M&A Intelligence Report on dlapiper.com.
Éanna Mellett, Partner
eanna.mellett@dlapiper.com
T: +353 1 436 5468 M: +353 87 456 9466
Matthew Cole, Partner
matthew.cole@dlapiper.com
T: +353 1 487 6669 M: +353 87 4498799
6th Floor, Stephen Court, 18-21 St Stephen's Green, Dublin 2, D02 N960, Ireland
DLA Piper has been named by Mergermarket as the Number 1 law firm for M&A (by volume) for each of the last 11 years.
(This article is sponsored by DLA Piper.)
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