New European Study of M&A Agreements

Yesterday, a European company called CMS that works in the M&A world released a report analyzing almost 500 European M&A agreements in 2007 and 2008. The report looked at public and private company mergers with some interesting results. CMS found that risk is shifting to sellers through the increased use of earn-outs, material adverse change (MAC) clauses, higher seller liability caps, and longer warranties. The report executive summary can be found here. The report also includes some notable statistics on M&A transactions in the US including the common use of MAC clauses in 78% of deals (versus only 17% in Europe) and the pervasiveness of working capital adjustments used in 68% of US deals (versus 24% in Europe).