With an analysis of 642 private-target acquisitions ($121 billion) that closed between 2016 and 2018, this year’s study is powered by MarketStandard®—the most comprehensive source of data on “what’s market” in private-target M&A. Key insights into the 2019 Buy-Side Reps and Warranties Insurance Deal Terms Study include:
- Correlation to Deal Characteristics: Buyer Power Ratio is highly correlated with the decision to use Buy-Side RWI in acquisitions involving publicly-traded, strategic buyers. The closer Buyer’s market cap is to the transaction value, the higher the probability that Buy-Side RWI will be used.
- Effect on Financial Terms: Separate purchase price adjustment escrows appear in 79% of deals with Buy-Side RWI and 21% of deals where RWI is not identified. Compared to what we saw last year, this gap is narrowing as use of a separate PPA escrow appears to be catching on with the M&A market more broadly.
- Effect on Representations and Warranties: Sellers continue to demand that representations and warranties minimize the risks not covered by the Buy-Side RWI policy. For example, over 90% of deals with Buy-Side RWI contain neither a 10b-5 nor a full disclosure representation and warranty.
You may also register for MarketStandard to access our online tool that allows you to apply filters to review data from transactions that look most like the one you are negotiating. MarketStandard is supported by the most comprehensive, continuously updated database of private-target deal terms available.