The US approach to risk allocation continues to favour buyers. While PPAs remained at 45% in Europe, they featured in 95% of all US deals.
The UK has the highest proportion of W&I insurance (37%) which means lower liability caps and shorter limitation periods for those deals. Limitation periods are longest in CEE and France, and liability caps are highest in the Germanic and Benelux regions.
CEE also leads in the use of MAC clauses, an increase of 7% this year, compared to the European average of 16%.
PPAs remain unpopular in Germanic-speaking countries, being used in 37% of deals, less than the European average of 45%. They are least applied in France however, which stands at 28%. Earn-outs were least used by CEE and France, which included them in only 8% of transactions, compared to the European average of 21%.
Locked boxes were unusual in Southern Europe, with only 36% of transactions without a PPA using this structure, far behind the European average of 56%. The concept of data room disclosure has not become widely adopted there either, with only 27% of transactions reflecting such a provision compared with over 50% for Benelux, CEE, Germanic and UK deals.
For more information: www.cms.law/int/M-A-Study-2020
5th February 2021
2nd February 2021