Impact of “Buyer Power Ratio” on Selected M&A Deal Terms in Acquisitions of Privately Held Target Companies by Publicly Traded Buyers

SRS Acquiom and the American Bar Association

Written in partnership with the M&A Committee of the American Bar Association’s Business Law Section, this study introduces a new tool, the Buyer Power RatioTM, to analyze private target acquisitions.  This joint study, which surveys M&A transactions involving publicly traded buyers and privately held target companies, aims to address the question of “what’s market” with a new approach  utilizing both the market capitalization of the buyer and the transaction size to gauge the relative negotiating leverage of the parties.

The study utilizes SRS Acquiom’s database of over 400 acquisition agreements in which we served as shareholders’ representative between 2012-2016. The vast majority of these deals are not required to be publicly reported and thus are unavailable to other studies.

Driven by the breadth of this data, seasoned practitioners believe Buyer Power Ratio is the single best predictor of deal outcomes demonstrated to date.

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