So far this year, the 131 deals valued at more than $25 million in the United States have presented the following trends:
Form of Consideration
During this time period, 79 of the deals or 60.3% had cash consideration, and 21 (16.03%) utilized equity consideration.
No-Shop and Go-Shop Provisions
Thus far in 2022, there have been 11 deals valued at more than $25 million with go-shop provisions, or 8.39% of deals valued at at least $25 million. The remainder of the deals had no-shop provisions.
Go shop provisions are typically used in private equity deals, and so far this year, their duration ranged from 1 day to 47 days, with a median of 33 days. The deals ranged from $16 billion to $240 million, with most of the deals being multi-billion-dollar deals.
Indemnity
An indemnification clause allows for cost to be moved from one party to the other in case of a breach, default or misconduct by one of the parties.
Furthermore, “(a)n indemnification ‘cap’ limits the overall liability of the seller to some dollar amount and an indemnification ‘basket’ establishes a threshold under which the buyer cannot make a claim against the seller,” according to Hadley Capital.
Five deals or 3.8% of the overall deals so far this year had an indemnification basket, with the highest being 10% of the transaction value. Meanwhile, 19 deals or 14.5% had an indemnification deductible that ranged from 0.5% to 100%. The dollar amounts at stake varied dramatically; one was as low as $175,000 and another was as high as $300 million. Interestingly, two deals had their indemnity cap set at 100% of the transaction value.
