I thought this might be of interest. I’ve also attached a fairly full exec summary of the research. If you would like to speak to one of the team at CMS I’ll arrange it.
Exclusive CMS M&A Research: Europe Stabilises post-Lehman
The CMS European M&A Study 2010 shows that post-Lehman, balance is returning as the market recovers
In the first European study to look at the mergers and acquisitions market before and after the collapse of Lehman Brothers, CMS draws on exclusive data from more than 750 M&A transactions stretching the length and breadth of Europe. The study’s findings reveal evidence that stability is returning to the M&A market in 2010.
“Only CMS, with our unique, unmatched footprint across Europe and leading market position, could pull together such robust data,” says Martin Mendelssohn, CMS Cameron McKenna corporate partner: “It clearly reflects the transition to a buyer’s market in 2007 and 2008. However, as more time passes following the Lehman Brothers insolvency there are now clear signs of a more balanced market for risk allocation between buyers and sellers.”
• Fewer purchase price adjustments, along with fewer non-competes, shorter limitation periods and exemptions from MAC clauses paint an overall picture of greater simplicity in M&A transactions during 2009
• Earn-outs – there has been only a slight increase in the number of transactions with earn-outs
• Liability caps - during the period 2007–2009 sellers found that liability caps were progressively increasing
• 2009 saw only a slight lengthening of warranty limitation periods
• A number of transactions reflect an element of distress
The research shows several ‘hot issues’ in M&A deals are more heavily negotiated post-Lehman. For example, negotiations over closing conditions have increased significantly, showing both sides are opting for more rigorous, explicit deal points before signing on the bottom line. More deals had bespoke conditions rather than just the usual conditions such as merger clearance or regulatory approval.
The period post-Lehman shows a notable decrease, from 61% in 2008 to 48% in 2009, in price adjustment clauses. This decrease may be surprising at first. It is most likely explained by the element of distress in many transactions leading to a lower, but fixed, purchase price acceptable to both parties. However, this comes against the backdrop of greater sophistication of purchase price mechanisms when they were used.
The CMS European M&A Study 2010 is based on in-depth analysis of 763 transactions relating to both non-listed public and private companies in Europe for the three-year period 2007–2009. More than 250 transactions relate to 2009. The data used in the Study is not publicly available and is based on privately negotiated transactions in which CMS acted as an advisor to either the buyer or the seller.
For more information, please contact:
Martin Mendelssohn, Partner, +44 (0)207 367 2872
Eve Mackinnon, Communications, +44 (0)207 367 3621
CMS provides a deep local understanding of legal, tax and business issues and delivers client-focused services through a joint strategy executed locally across 28 jurisdictions with 56 offices in Western and Central Europe and beyond.
The CMS nine member firms are: CMS Adonnino Ascoli & Cavasola Scamoni (Italy); CMS Albiñana & Suárez de Lezo (Spain); CMS Bureau Francis Lefebvre (France); CMS Cameron McKenna LLP (UK); CMS DeBacker (Belgium); CMS Derks Star Busmann (Netherlands); CMS von Erlach Henrici Ltd. (Switzerland); CMS Hasche Sigle (Germany); and CMS Reich-Rohrwig Hainz (Austria).
01225 747 213
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