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2020 SRS Acquiom M&A Claims Insights Report

M&A consulting firm SRS Acquiom released its 2020 M&A Claims Insights Report this week, detailing claims experienced in connection with M&A transactions where the firm was involved. The data are revealing.  Out of the set of deals included in the study:

- 81% had a purchase price adjustment (“PPA”) mechanism
- 90% of PPA statements were delivered on time, while 10% were late
- The average size of PPA claims in deals with a buyer-favorable adjustment was 1% of total transaction value
- Of all the PPA claims made, 50% were favorable to the buyer while 29% were favorable to the seller (with the other 21% resulting in no payment adjustment)

Of even greater interest to M&A deal makers is what the study shows about indemnification claims. Indemnification provisions in M&A deals often receive a large amount of time and attention in deal negotiations.

In the deals included in the SRS Acquiom study:

- 38% resulted in at least one indemnity claim
- Of those deals that had at least one indemnity claim, 54% of those had aggregate claims of more than $1 million

Of those deals that had claims:
    • 25% were less than $50,000
    •  17% were between $50 and $150,000
    •  22% were between $150 and $500,000
    •  15% were between $500,000 and $2 million
    •  11% were between $2 and 10 million
    •  7% were greater than $10 million

An analysis of post-closing activity in private-target M&A transactions with escrows that released between Q3 2018 - Q3 2020

Tags

srs acqiom, mergers and acquisitions, insights, wilson_jonathan