The M&A market is constantly evolving — from the predominantly seller’s market of H2 2019, to the tumultuous times of H1 2020, dynamics are shifting. Deal terms vary by transaction size, industry sector, and jurisdiction. Having a thorough knowledge of market trends is critical to negotiating and executing a successful deal.
Latham & Watkins has produced the seventh edition of its annual survey of European private equity transactions. We analysed the acquisition and equity documentation from more than 260 deals signing or closing between July 2018 and June 2020 (inclusive), on which our European offices advised.
Examples of key trends and developments include:
- Market factors influencing the choice of consideration mechanism
- Rising use of escrows since the start of 2020
- Popularity of earnouts increasing
- Prevalence of foreign direct investment approval conditions growing
- Uptake of Warranty & Indemnity (W&I) insurance flattening, with the impact of W&I insurance on warranty limitations continuing
- Equity commitment letter conditionality falling
We would be delighted to present our findings to your team and discuss how market trends could impact your approach to deal negotiations.