M&A Insights | M and A Solutions | SRS Acquiom

Gain a deeper understanding of the latest trends in M&A with insights only SRS Acquiom can provide, based on our proprietary data from more than 2,230 deals.

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Buy-Side Representations and Warranties Insurance Deal Terms Study

MarketStandard Deal Terms Database

2018 SRS Acquiom M&A Deal Terms Study

MarketStandard Deal Terms Database

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Purchase Price Adjustments: Setting the Working Capital Target

The purpose of this paper is to provide our view as to best practices the parties should use in setting the working capital target and pitfalls to avoid. In an ideal scenario, the working capital target will be set so as to minimize the amount of any adjustment and any controversy that could result after a deal closes.

Working Capital Adjustment Checklist - Step by step M&A guide

Working Capital Adjustment Checklist and Guidelines

This checklist is meant to be a guide for seller company management teams and their accounting and legal advisors to help them successfully set the working capital target, negotiate the relevant portion of the acquisition agreement and prepare the estimated (pre-closing) balance sheet of the Company in anticipation of the closing of the deal.

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Why a Properly Sized Expense Fund Can Be Good for Buyers and Sellers

A comprehensive look at why it is important to establish an expense fund, why the size of the expense fund matters, and how buyers and sellers may benefit. Additionally, the rising cost of good representation and new financing options will be reviewed.

MarketStandard Deal Terms Database

Buy-Side Representations and Warranties Insurance Deal Terms Study

SRS Acquiom has a first look at the numbers behind Buy-Side Reps and Warranties Insurance, with a new RWI deal terms study showing correlations between RWI and other key terms in M&A agreements.

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The Do’s and Don’t’s of Pro-Rata Share Ownership

A common issue that can delay the M&A payments release process and require an amendment to the definitive agreement relates to pro-rata share ownership.

SRS Acquiom Drafting Tips M&A solutions

Nine Essential Drafting Tips for Post-Closing Issues

Learn essential drafting tips to avoid post-closing issues. Topics covered include expense funds, confidentiality, resignation/removal/replacement provisions, scope of agency, working capital and issues related to overlap in definitions.

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Saving for a Rainy Day in M&A: 4 Commonly Asked Questions About Expense Funds

Expense funds are crucial and stockholders, lawyers, and buyers should know what they are, how they are established, and what affects their size. Below are the four most common expense fund questions we get, and answers based on our experience.

MarketStandard Deal Terms Database

2018 SRS Acquiom M&A Deal Terms Study

This deal terms study analyzes 925 private-target acquisitions ($165 billion) that closed from 2014 through 2017 in which SRS Acquiom provided professional and financial services. The vast majority of these deals are not required to be publicly reported.

Know Your Customer Mergers and Acquisitions (M&A) Key

Concern Over New Rules Requiring Disclosure of Personal Information

New 2018 KYC Requirements Add Challenges to Opening Accounts Needed to Close M&A Deals

Life Sciences 2018 Pharma Snapshot infographic

Life Sciences M&A: Pharma Milestone Snapshot

Our new infographic provides a unique view into milestone achievement and new drug successes for biotech/pharma transactions with over $50MM upfront deal value.

Life Sciences 2018 Diligence Requirements (M&A)

Life Sciences M&A: Diligence Requirements

Our new infographic provides a unique view into diligence requirements for private-target life sciences M&A transactions from 2008 to 2017.

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M&A Payments Trends

A snapshot of M&A payments trends from SRS Acquiom. With over $81 billion in payments disbursed through their comprehensive payments platform, SRS Acquiom has compiled a variety of payments statistics and data on shareholder behavior for M&A professionals in a handy infographic.

M&A Transctional Insurance Guidebook

M&A Transactional Insurance Guidebook, 2nd Edition

Key Issues to Consider When Allocating M&A Transaction Risk

M&A Trends

M&A Negotiating Trends: M&A Buyers Respond to Seller-Friendly Market

With data provided by SRS Acquiom® and Bloomberg Law®, this report discusses factors that may have contributed to the rise of more seller-friendly terms, reviews terms that have become more seller-friendly, and identifies tactics buyers have used to curb these terms.

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How to Handle Compensatory Payments Post-Closing

Many selling companies who participate in private M&A transactions have shareholders whose allocated transaction consideration is classified as income or compensation under IRS guidelines. The shareholder payments will likely require income withholding. Learn how to handle these types of compensatory payments with ease.

Tax Tips acquisition merger and acquisition (M&A)

Tips for 2017 Year-End Planning

As year-end approaches, we offer the following guidance and services to assist in your tax, liquidity and wind-down planning.

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Understanding Changes in Shareholder Consent Requirements

Three Years Later, Cigna v. Audax Drives Buyer Requirements for Supermajority Shareholder Approvals

Life Sciences M&A Study Deal Terms Data merger and acquisition (M&A)

2017 SRS Acquiom Life Sciences M&A Study

Deal terms, milestone achievements, and other data from private-target life sciences M&A transactions from 2008 to 2017

M&A Payment

5 Easy Ways to Avoid M&A Payment Pitfalls

A helpful infographic outlining the top 5 reasons M&A payments are delayed or prone to mistakes by paying agents and how to solve them.

Impact of “Buyer Power Ratio” on M&A Deal Terms

Developed in partnership with the M&A Committee of the American Bar Association’s Business Law Section, this study introduces the Buyer Power Ratio^TM, to analyze private target acquisitions by public buyers.

MarketStandard Deal Terms Database

2017 SRS Acquiom M&A Deal Terms Study

This study analyzes 795 private-target acquisitions ($139 billion) that closed from 2013 through 2016 in which SRS Acquiom provided professional and financial services.

MarketStandard Deal Terms Database

Market Data and Trends in M&A Deal Terms

An analysis of 795 deals (2013 – 2016) valued at $139 Billion

SRS Acquiom Debuts New Brand on 10 Year Anniversary

Why we updated the look and feel of our brand.

M&A Earnout

Earnout Achievement at a Glance, Part 2

On most life sciences deals, milestone achievement is a critical element of recognizing full deal value. The second infographic in our earnout achievement series provides a unique view into disputes and renegotiations.

M&A Earnouts

Earnout Achievement at a Glance

On most life sciences deals, milestone achievement is a critical element of recognizing full deal value. Our new infographic provides a unique view into milestone achievement and new drug successes.

Indemnification Solutions in M&A

What’s Best For Your Deal? Escrows vs. R&W Insurance

Unexpected Drains on Private Equity Productivity

Learn how to more effectively outsource work related to representations and warranties insurance, purchase price adjustments, and escrow services and help your team focus on more important issues to maximize results.

Representations and Warranties Insurance

Mind the Gap: The Space Between a Post-Closing PPA and R&W Insurance

Considerations for how items excluded from the post-closing purchase price adjustment are handled in a deal with representations and warranties insurance.

2016 SRS Acquiom Life Science M&A Earnout Achievement Update

The 2016 SRS Acquiom Life Sciences M&A Earnout Achievement Update presents almost a decade’s worth of experience managing over 100 deals with more than $27 billion in potential milestone payments.

Tips for 2016 Year-End Planning

As year-end approaches, we offer the following guidance and services to assist in your tax, liquidity and wind-down planning.

M&A Transaction Insurance Guidebook

Key Issues to Consider When Allocating M&A Transaction Risk

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An Overview of Representations & Warranties Insurance

An overview of representation and warranties insurance

reps and warranties insurance

Escrows vs. Representations & Warranties Insurance

Evaluating the need for escrow versus representations and warranties insurance in M&A deals.

Top 10 Things to Watch for in M&A Payments

We’ve put together a quick checklist of the top 10 things to watch for in M&A payments to make selecting a payments administrator an easy decision when the time comes.

What to Make of the Great Hill Case

An analysis of merger agreements closed since the November, 2013 Great Hill ruling reveals no apparent consensus on how selling companies are assigning rights of attorney-client privilege related to pre-closing communications.

Innovation in Escrow

Why Traditional Escrow Investments May No Longer Work for M&A

The Importance of Information Rights

If a seller isn’t granted information rights under the merger agreement, an earnout that isn’t performing could descend into a dispute, even if the relationship between seller and acquirer was civil when the deal closed.

Faces of SRS Acquiom: Daren Di Nicola

A client story from our Senior Director of Acquiom Business Development

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Being Prepared for the Unexpected in M&A Dispute Resolution

Beyond resources and conflict issues, the right to appeal, cost considerations, and the role of arbitrators can all contribute to unexpected results for participants on both sides of an M&A transaction.

Stock Escrows: Structure Matters

M&A transactions involving escrowed stock are on the rise. As a result, it is important to fully understand the mechanics of stock escrows to maximize efficiency and avoid surprises when it comes time to release the stock to shareholders.

2016 SRS Acquiom M&A Deal Terms Study

An analysis of deal terms from 735 private-target transactions from 2012-2015, seeking to arm deal professionals with robust, reliable information found only at SRS Acquiom.

Re-engineering Escrow Investment Returns

Ensuring Safe Assets While Improving M&A Escrow Investment Returns

Merger and Acquisition Conflict Waivers

Watch Out for Conflict Issues in Accounting Arbitrations

Part 2 of 3 in a series exploring issues in arbitration

How Your Deal Treats the Payout of Employee Stock Options Can Have Significant Payroll Tax Implications

Understanding the unique tax implications for ISOs

Payments Administrators: A Deal Lawyer’s (Not So) Secret Weapon

Engaging a payments administrator that provides a wide range of services can provide that relief and be a breath of fresh air in an otherwise hectic closing.

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Taxation of Interest Earned on the Escrow: Actual vs. Imputed

Understanding how interest earned on escrow deposits will affect deal participants, and to clarify tax reporting requirements for both deal parties.

Tips for 2015 Year-End Planning

As year-end approaches, we offer the following guidance and services to assist in your tax, liquidity and wind-down planning.

Limiting Discovery Through Arbitration is Not Without Risk for Sellers

Part 1 of 3: Considerations in Effective M&A Dispute Resolution

Regulatory Changes Reshape the Liquidity Landscape

Regulatory Overview for Short-Term Investments, including M&A Escrow Deposits (Part 1 of 3 in a series on Changing Regulations)

Sales Taxes: Whose Tax is it Anyway?

A common indemnification claim that SRS Acquiom sees relates to sales tax exposure of the target company. These claims tend to be complicated because they often involve an assessment of the target company’s interactions with customers in multiple states and the application of these states’ tax laws.

In Earnouts, Focus on Outcomes Rather than Milestones Envisioned Today

Earnouts are sometimes technically missed for reasons that are caused by changes in business strategy, while the buyer may still be getting the value sought from the company purchased.

Relationship Management with the Buyer in Earnout Situations

Sellers must successfully navigate the internal relationships, politics, and various strategic motivations of their large company partner to get their product approved and to market.

Selling Residual Interest to Write Off Investment Losses

SRS Acquiom is sometimes asked to purchase residual interests in unsuccessful investments, so its clients can realize losses for tax purposes in a given calendar year.

Stock-for-Stock Transactions: Understanding the Role of the Purchaser Rep

The role of the purchaser representative is to ensure that non-accredited investors evaluate the merits and risks of the prospective investment in the acquirer’s stock.

Pre-closing-Checklist Merger and Acquisition (M&A) solutions

Pre-Closing Checklist for M&A Seller Management

Often overlooked during deal negotiation, the items on this checklist can prove critical after closing.

Indemnification Claim or Working Capital Adjustment? OSI Systems v. Instrumentarium

Working capital claims typically are not subject to indemnification baskets or caps, but claims of breaches of representations or warranties are.

Additional Response Time if Adjustments are Substantial

It typically takes longer for a shareholder representative to review working capital calculations when material adjustments might be made, because both the number of issues and the complexity of such issues tend to increase as the amount of the adjustment increases.

Your Relationship with Your Shareholder Representative

When considering who should serve as your shareholder representative, you should have a conversation regarding the expectation of the relationship.

The Reason for the Stockholder Representative’s Authority

Most merger agreements improperly draft the language appointing the stockholder representative.

The Scope of Power of the Shareholder Representative

The question about where the line should be drawn on the limits of the representative's authority is a good one.

The Representative’s Access to Information After Closing

Even if the parties agree that access to some information is reasonable, they can differ on how much is appropriate.

Information Sharing Between the Shareholder Representative and Shareholders

The representative should either be able to communicate with the shareholders or should be able to communicate with a subset of shareholders who are also bound by confidentiality obligations.

Resignation or Removal of the Shareholder Representative

Merger agreements should make clear that the shareholder representative can resign or be removed by the selling shareholders at any time.

How Best to Effect Payments

Issues can arise when the parties decide to use an escrow agent that is different from the paying agent.

Accounting for Unclaimed Transaction Proceeds

Eventually unclaimed merger consideration will be deemed abandoned and escheat to the state after a period of time provided by statute.

Who Should Indemnify the Escrow Bank?

It should be the principals to the deal, i.e. those benefiting from the transaction, who provide any necessary indemnification.

Cross-Border Transactions; Watch Out for FBAR

Given the complexity, fickle nature and significant penalties, we advise all shareholders to look at their escrows to determine whether any are held in foreign accounts.

Perfected Security Interest in Escrow Funds

SRS Acquiom does not believe it is best practice for a merger party to be granted security interest in the escrow.

M&A: Tax Reporting and Payments to Employees

Shareholder representatives and company buyers need to be aware of the proper tax treatment for each shareholder participating in escrows.

The Problems with Pro Ratas

Pro rata formulas are often complicated and mistakes are frequently made.

Distribution of Escrow Release Payments

Have the distribution payments default to what the shareholder requests at closing

How and When to Use Representation and Warranty Insurance

The parties on many deals decline to purchase representation and warranty insurance because they perceive the cost to be too great for the risk that is being mitigated.

How Private Equity Manages the M&A Post-Closing Process

In private equity transactions the lead investor frequently elects to assume the role of shareholder representative. However, there are significant risks and costs associated with the role.

Selling Your Company May Require Multiple Law Firms

SRS Acquiom has seen a trend toward having a separate firm that represents the interests of a stockholder or group of stockholders.

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Shareholder Releases and Letters of Transmittal

Even with good exits, a shareholder can always try to argue that the company could have done better.

Contribution and Joinder Agreements

Recently, SRS Acquiom has seen more transactions in which the acquiring company requires the selling shareholders to enter into side agreements to ensure that certain terms of the merger agreement are enforceable against them.

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Delays in Getting Paid? Seven Tips for Avoiding Problems in M&A Payments

Seven of the most common problems and thoughts about how to prevent them.

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Insurance-backed M&A Escrow Solutions vs. Traditional Bank Products

A comparison of insurance-backed escrow investment solutions to traditional investment products distributed by escrow banks

2015 Life Sciences M&A Update

This update more than doubles the data available on earn-out milestone achievement rates originally included in our 2012 M&A Life Sciences Study.

New Regulations Will Shake Up M&A Escrow Landscape

Challenges to principal protection and liquidity require new options.

2015 SRS Acquiom M&A Claims Study (Sample)

This is a sample of the full study which analyzes post-closing escrow claim activity across 720 private-target acquisitions on which SRS served as the shareholder representative from 2010 through 2014.

Tales from the M&A Trenches

Tales from the M&A Trenches is a culmination of SRS Acquiom’s experience as professional shareholder representative and payments administrator on hundreds of deals—distilled into drafting tips, pointers and best practices.

Earnouts: How Often Are Life Sciences Milestones Achieved? Tips for Avoiding Disputes

An analysis of earnouts in M&A life science deals related to milestones and tips on how to avoid disputes.

Maintaining Post-Closing Control While Avoiding the Risks

Avoiding Improper Lock-up of Escrow Money

Tying up as much money as possible for as long as possible is, all else being equal, a good thing for buyers and a bad thing for sellers.

Where to Hold the Expense Fund

If the expense fund account is held by the shareholder representative, the arrangement is typically simpler.

Disbursement of Funds—Who Touches the Money?

It is important to ensure that the representative knows how to properly hold funds to ensure the assets are safely held and invested in order to minimize potential exposure to claims from creditors.

Legal Opinion Paves Way for Paperless Closings & Online Payments

For decades, M&A deal closings have been completed by mailing piles of paper back and forth between the merger parties, the stockholders and a paying agent.

Merger and Acquisition Conflict Waivers

M&A Conflict Waivers

Inclusion of conflict waivers has nearly doubled from 2012 to 2014.

Satisfying Basket Thresholds

The threshold should be met only after the buyer has suffered actual damages in excess of the basket amount.

Preparing and Filing Tax Returns

Though it may seem simple, it is impractical for the shareholder representative to prepare the tax return.

Disappearing Money: The Perils of Multi-Party Notice Provisions

The escrow bank typically does not have any obligation to verify that the representative actually received notice. This presents two related but meaningful risks.

Clarifying When Attorneys’ Fees Constitute Damages

14% of all claims relate to the buyer looking to recover fees and expenses incurred in connection with the issue rather than losses related to the issue itself.

Netting Payments vs. Submitting Claims

Many merger agreements do not make clear which option is the intended treatment.

Working Capital Definition

SRS Acquiom believes that working capital is based on the company’s final closing balance sheet, and not the buyer’s opening balance sheet.

Beware of Exclusions When Defining Net Working Capital

Best practice is to ensure that cash is included in the definition of net working capital so that the benefit of a true-up can flow to either party.

Working Capital Adjustment AND Indemnification Claim? No “Second Bite at the Apple”

Counsel especially familiar with accounting issues should help define the circumstances in which a claim may be denied under the working capital provisions, but might be properly indemnifiable.

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Think Twice Before Including Deferred Tax Assets and Liabilities in Working Capital Calculations

SRS Acquiom has seen large purchase price adjustments for reasons that will never affect the combined company’s actual cash position or value.

Contingent, Unknown and Unquantifiable Liabilities—Working Capital Adjustment or Indemnification Claim?

Contingent, unknown and unquantifiable liabilities are problematic in the post-closing purchase price adjustment process.

Buyer’s Obligation to Provide Access to Books and Records

Buyer will use reasonable efforts to provide access to the books and records of the Company electronically.

Consequences of Buyer Not Delivering Adjustment Statements

If the buyer fails to deliver the notice of adjustments within the required time frame... has it forfeited its right to do so?

Definition of Purchase Price

Merger consideration should be defined as the amount paid at closing plus whatever balance remains at the end point of the escrow process.

Damages Based on Financial Misstatements

Parties should define in the merger agreement how such damages are to be calculated.

Do Carveouts to Caps Work the Way You Intend?

Parties should clarify whether indemnification caps are intended to be inclusive or exclusive of each other.

Assuming Defense of Third-Party Claims: the Moral Hazard Problem

If the party that controls the defense is not the party responsible for any related payments, there can be a moral hazard problem.

Enforceability of Representation and Warranty Survival Periods—Western Filter v. Argan

A stated escrow period may not be respected.

Establishing an Expense Fund

Many top litigators suggest that establishing an expense fund is one of the biggest deterrents to claims.

M&A Conflict Waivers and Privilege Issues

Conflict issues are complex and can have a significant impact on post-closing claims and disputes.

M&A Payments in Just Minutes

How Private Equity Manages the M&A Post-Closing Process

This paper explores how to mitigate the risks of acting as your own shareholder representative, and how private equity firms can more efficiently manage the post-closing process while retaining complete control.

Legal Opinion Paves Way for Paperless Closings

For decades, M&A deal closings have been completed by mailing piles of paper back and forth between the merger parties, the stockholders and a paying agent. This is hugely inefficient and costly.

Solving for Administrative Inefficiencies in M&A

Costs related to inefficiencies exceed $5 billion. New services are solving for this.

Shedding Light on the Terms of Undisclosed M&A Deals

We analyze the financial and legal terms of nearly 500 undisclosed, private-target M&A transactions.

Keeping Investment Funds Out Of Litigation Purgatory

Retention of a professional shareholder representative is increasingly important for a number of strategic reasons.

M&A Pre-Closing Checklist

A list of what should be done prior to closing to minimize the risk of post-closing challenges

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Who Owns the Attorney-Client Privilege After Closing?

In most deals, the sell-side law firm’s client is the target company, not its stockholders.

2012 Life Sciences M&A Study

The 2012 SRS Life Sciences M&A Study analyzes 47 private-target acquisitions on which SRS served as the shareholder representative.

Client Quotes and Stories

See why clients rely on us to
elevate their gain.

SRS Acquiom provides seamless shareholder representation and is a great resource for M&A terms and rep & warranty insurance.

Dave Markland, CFO and Administrative Partner, Tenaya Capital

SRS Acquiom is changing the rules for how M&A payments are administered and how the post-closing period is managed.

Steve Miles, Group Vice President and Sales Director, SunTrust Bank

Most M&A lawyers move on to the next deal without much thought about how tedious the payments process can be for merger parties. SRS Acquiom Clearinghouse is a significant value-add-on to an M&A practitioner’s client toolkit.

Nicholas Deitrich, Retired Partner, Gowlings

M&A deal technology has evolved, but some aspects haven’t changed for decades. Services like SRS Acquiom Clearinghouse show what technology can do to make the deal process more efficient from both an economic and practical standpoint.

John Hughes, Partner, Sidley Austin LLP

SRS Acquiom has earned our business and future business. They make a complicated process simple and keep lines of communication open at all times.

Jim Bullock, President and CEO, Zyga Technology

SRS Acquiom has been flexible and responsive to our many needs. They get the job done and have exceeded our tough standards.

Peggy Tirrell, Assistant General Counsel, Dell, Inc.

SRS Acquiom takes a process that has often been problematic and makes it simple. In particular, their unique online portal provides an extremely useful way for shareholders to track and monitor their escrow balances and status.

Scott Ring, General Counsel and Partner, Bessemer Venture Partners

Unlike most paying agents, a sophisticated payments administrator handles the headache of employee compensation with ease. They provide peace of mind.

Benton Bodamer, Counsel, Goodwin Procter

What SRS Acquiom does is not part of our brain process. We just want things to be done...no pain, no problems. They make sure nothing gets in the way of my deal.

Nils Holum, Vice President, Middle Market Private Equity Firm