Announcing the ABA’s 2021 Private Target Mergers & Acquisitions Deal Points Study

In Brief

• The 2021 Private Target Mergers & Acquisitions Deal Points Study is now available on the ABA Business Law Section M&A Committee’s Market Trends Subcommittee’s webpage.
• M&A Committee membership is free to all Business Law Section members to access the study.
• The 2021 study includes more current data, provides multiyear comparisons and contains new data points as compared to prior iterations.

As chairs of the American Bar Association’s Private Target Mergers & Acquisitions Deal Points Study (the Private Target Deal Points Study), we are pleased to announce that we published the latest iteration of the study to the ABA’s website on December 30, 2021.

Congratulations! But Wait. What Exactly Is This Private Target Deal Points Study, Anyway?

The Private Target Deal Points Study is a publication of the Market Trends Subcommittee of the Business Law Section’s M&A Committee. It examines the prevalence of certain provisions in publicly available private target mergers and acquisitions transactions during a specified time period. The Private Target Deal Points Study is the preeminent study of M&A transactions, widely utilized by practitioners, investment bankers, corporate development teams, and other advisors.

The 2021 iteration of the Private Target Deal Points Study analyzes publicly available definitive acquisition agreements for transactions executed and/or completed either during calendar year 2020 or during the first quarter of calendar year 2021. In each case, the transaction involved a private target acquired by a public buyer, with the acquisition material enough to that public buyer for the Securities and Exchange Commission to require public disclosure of the applicable definitive acquisition agreement.

The final sample examined by the 2021 Private Target Deal Points Study is made up of 123 definitive acquisition agreements and excludes agreements for transactions in which the target was in bankruptcy, reverse mergers, divisional sales, and transactions otherwise deemed inappropriate for inclusion.

Although the deals in the 2021 Private Target Deal Points Study reflect a broad array of industries, the health care and technology sectors together made up nearly one-third of the deals. Asset deals comprised 18.7% of the study sample, with the remainder either equity purchases or mergers.

Of the 2021 Private Target Deal Points Study sample, 22 deals signed and closed simultaneously, whereas the remaining 101 deals had a deferred closing some time after execution of the definitive purchase agreement.

The transactions analyzed in the 2021 Private Target Deal Points Study were in the “middle market,” with purchase prices ranging between $30 million and $750 million; purchase prices for most deals in the data pool were below $200 million.

The Private Target Deal Points Study Sounds Great! How Can I Get a Copy?

• All members of the M&A Committee of the Business Law Section received an e-mail alert from Jessica Pearlman with a link when the study was published. If you are not currently a member of the M&A Committee but don’t want to miss future e-mail alerts, committee membership is free to Business Law Section members, and you can sign up on the M&A Committee’s homepage.
• ABA members who are not currently members of the Business Law Section can sign up to join on the Section’s membership webpage.
• The published 2021 Private Target Deal Points Study is available for download by M&A Committee members from the Market Trends Subcommittee’s Deal Points Studies page on the ABA’s website. Also available at that link are the most recently published versions of the other studies published by the Market Trends Subcommittee, including the Canadian Public Target M&A Deal Points Study, Carveout Transactions M&A Deal Points Study, and Strategic Buyer/Public Target M&A Deal Points Study.

How Does the 2021 Private Target Deal Points Study Differ from the Prior Version?

The 2021 version of the Private Target Deal Points Study has a number of features that differentiate it from prior iterations.

• Data in the 2021 version of the Private Target Deal Points Study is more current. The 2021 version of the Private Target Deal Points Study includes not only 2020 transactions, but also transactions from the first quarter of 2021.
• The 2021 version of the Private Target Deal Points Study contains many new data points.
  • Termination Fees. For the first time ever, the 2021 version of the Private Target Deal Points Study provides a unique look at termination fees in the private target context.
  • COVID-19 Data. Also, understandably, for the first time ever, the study includes data on COVID-19, including how an exception to the ordinary course covenant for responses to the pandemic grew over time.
  • Other New Data. There are other new data points scattered throughout the study with “new data” flags to make them easy to spot:

• RWI Data. The use of representations and warranties insurance (“RWI”) continued to expand, and the study reflects the big jump from 52% in the prior study to 65% in this study. We’ve also added a data point on covenants to maintain the RWI policy (look for the new data flag in that section).

Please join us in extending a hearty thank you to everyone who worked so hard on this study, from leadership to advisors to issue group leaders to the working groups, all of whom are listed in the credits pages.