About this Study
Throughout this study, we make special note of deal terms that we identified as being particularly influenced by the COVID-19 pandemic.
The 2021 M&A Deal Terms Study is powered by SRS Acquiom MarketStandard , a tool to analyze our proprietary database of more than 2,800 private-target M&A deals with customizable searches best suited to your specific transaction.
About the M&A Deal Terms Study Data
Total M&A Deals: 1,400+
Total Deal Value: $285.8B
Deal Points Key Findings
- 1. Buyer Equity as Part of Deal Consideration Grew: 21% of 2020 deals featured buyer equity as part of deal consideration, up from 13% in 2018 and 15% in 2019
- 2. Separate Purchase Price Adjustment (PPA) Escrows Increased Steadily: 68% of 2020 deals included a dedicated PPA escrow.
- 3. Earnouts Were Larger and More Frequent: In 2020, 19% of non-life sciences deals included an earnout. The median earnout potential as a percentage of the closing payment increased significantly, to 39%.
- 4. A New Carveout to the Definition of Material Adverse Effect (MAE) Became Common Almost Overnight: While included infrequently prior to 2020, a “Pandemic” was added as an exception to the definition of a MAE in more than 75% of deals by the third quarter of 2020.
- 5. Earnout Periods for 2020 Deals Trended Longer: Fewer deals have an earnout period that is one year or less, and more are set to last two or three years.
To see how results may change for different segments of the M&A market go to our interactive, online version of this study: srsacquiom.com/marketstandard/