M&A Deal Terms & Trends Pre- & Post-COVID-19

Market Situation

Steady increases until 2020

  • Shorter overall investment periods
  • More capital-raise events
  • 67% increase in number of deals per year over the last decade
  • 73% aggregate deal-value increase
  • Increase in pro-seller terms followed these curves

Private-Target M&A Deal Counts and Volume

COVID-19: Deal terms are changing, and some impacts may last

Material Adverse Effects

  • Pandemic carveouts are the norm with occasional carveouts for law compliance

Interim Operating Covenants / Reps and Warranties Disclosures

  • Qualifiers for “ordinary course of business” and employment status

Purchase Price Adjustments and PPP Loans

  • New guidance regarding repayment and escrow requirements for PPP loans


  • Increase in use of EBITDA or earnings measurement versus revenue

Protect Your Negotiations & Deals


  • Opportunities to negotiate refunds (CARES Act)
  • Tax audit timing is longer, resulting in delayed escrow releases

Earnout Cases

  • Online clothing company: Earnout provisions require open stores and pre-COVID operations
  • Pharmaceuticals: Clinical trials delayed beyond milestone deadline


  • Buyer’s ability to pay depends on available cash and solvency
  • Solvency impacts how claims are negotiated and resolved

Stock Deals

  • Stock escrows fluctuate quickly in value, further pressurizing decisions
  • Similar sense of urgency where buyer stock (in escrow or holdback) is declining in value

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