DLA Piper Global M&A Intelligence Report 2022
DLA Piper has published its 2022 Global M&A Intelligence Report which details the most recent trends observed by its lawyers and from the DLA Piper database of over 4,700 private M&A deals.
Over the eight years that the report has been running, some convergence in global deal terms can be seen but key differences remain between geographies, deal processes and the approach taken by trade and private equity in the market. The key findings of the report include:
- US and Europe (particularly US vs UK) remain the most differentiated globally with very little evidence of convergence but with a general trend in both markets of deal terms moving in favor of sellers. Global markets generally are currently seller friendly, although are showing signs of a softening in the market in most jurisdictions. The US approach is significantly more balanced between buyers and sellers than major European markets.
- The terms of large deals do differ from the terms in smaller deals. A large deal is more likely to proceed by way of auction; more likely to have a locked box mechanism and more likely to have a gap between signing and closing. Smaller deals see more earn-outs and sellers are more likely to be tied into restrictive covenants.
- There remain key differences in the approaches taken by private equity and trade when they transact M&A. There is however evidence of convergence and it is usually trade adopting private equity approaches.
- Every year our report shows us that sellers are the real winners in auction processes. Sellers who sell via an auction generally negotiate shorter limitation periods, lower caps on liability, are more likely to have a certain deal from signing and are less likely to have to give restrictive covenants (and when they do, they are for shorter periods). That trend has continued.
Jon Kenworthy, Corporate partner at DLA Piper, said: “Other than what turned out to be a brief pause in 2020 caused by COVID-19, the M&A market has been very strong for a long period. That will change at some point and it will be interesting to see how deal terms react when it does. Our own view is that any change will be very gradual – the seller friendly deal terms have become pretty entrenched and, for many in the market, are the only terms they have known.”
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