Close X
Attorney Spotlight

How did an interest in healthcare policy lead Robert Platt to a career in the law? Find out more>


Close X


Search our Experience

Experience Spotlight

Primary Care Providers Win Challenge of CMS Interpretation of Enhanced Payment Law

With the help and support of the Tennessee Medical Association, 21 Tennessee physicians of underserved communities joined together and retained Bass, Berry & Sims to file suit against the Centers for Medicare & Medicaid Services to stop improper collection efforts. Our team, led by David King, was successful in halting efforts to recoup TennCare payments that were used legitimately to expand services in communities that needed them. Read more

Tennessee Medical Association & Bass, Berry & Sims

Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Six Things to Know Before Buying a Physician Practice spotlight

Dermatology, ophthalmology, radiology, urology…the list goes on. Yet, in any physician practice management transaction, there are six key considerations that apply and, if not carefully managed, can derail a transaction. Download the 6 Things to Know Before Buying a Physician Practice to keep your physician practice management transactions on track.

Click here to download the guide.

ABA Private Target Mergers & Acquisitions Deal Points Study Released


January 9, 2014

The American Bar Association has just released its 2013 Private Target Mergers & Acquisitions Deal Points Study. The Study is the American Bar Association's latest installment to a series of studies published in 2011, 2009 and 2007 analyzing commonly negotiated deal points. The Study covers publicly available acquisition agreements of private targets by public companies for transactions completed in 2012. The final sample of 136 acquisition agreements analyzed in the Study reflected transactions ranging in value from $17.2 million to $4.7 billion, with a median transaction value of $150 million (excluding earnouts and assumption of debt).

The results of the Study offer valuable information and benchmarks for transactions completed in 2012, as well as comparative data points demonstrating notable changes from transactions completed in 2010 and 2008.

A full copy of the Study may be obtained from the American Bar Association or by contacting one of the Bass, Berry & Sims PLC attorneys.

Overview of 2012 Transactions

According to the Study, technology and health care remained the industries with the greatest deal volume in 2012, comprising 26% and 20% of all transactions, respectively. The Study also suggests a continued trend away from entrepreneurial sellers and toward sellers backed by financial sponsors. Specifically, entrepreneurial transactions in which founders appear to dominate the target’s management and ownership decreased to 39%, down from 47% in 2010, while financial transactions, or transactions in which the target is backed by financial sponsors with significant control increased to 49% of all transactions in 2012, compared with 45% in 2010.

Highlights of Changes from 2010 to 2012

The results of the Study highlight important changes and trends between transactions completed in 2010 and those completed in 2012. The following represent some of the more notable shifts in commonly negotiated deal points in 2012:

Financial Provisions

  • Among transactions which included post-closing purchase price adjustment provisions, working capital remained the most common adjustment but adjustments for debt, assets, cash and other items were more common than in 2010 (debt adjustments increased from 28% to 44%; cash adjustments increased from 23% to 35% and other items adjustments increased from 23% to 35%).
  • More transactions with a working capital adjustment defined "working capital" to exclude current tax assets and current tax liabilities (up to 39% in 2012 from 20% in 2010).
  • Fewer transactions included earnouts (down to 25% in 2012 from 38% in 2010).
  • More transactions with an earnout did not include a covenant to run the business to maximize earnout (88% in 2012 compared to 78% in 2010).
  • Fewer transactions with an earnout provided that the earnout expressly accelerates on a change in control (down to 21% in 2012 from 35% in 2010).
  • More transactions included an express disclaimer of a fiduciary relationship with respect to the earnout (up to 15% in 2012 from 3% in 2010).

Definition of Material Adverse Effect

  • None of the agreements analyzed in the Study referenced a specific dollar amount threshold in the "material adverse effect" definition (compared to 8% in 2010).

Target’s Representations, Warranties and Covenants

  • The Study suggests pervasive adoption of a "fair presentation" representation as to the target's financial statements (99% included this representation in 2012 compared with 77% in 2010).
  • Of those transactions including a "no undisclosed liabilities" representation, a greater percentage of transactions used a buyer-favorable formulation that covers all liabilities, instead of just GAAP liabilities (up to 78% in 2012 from 61% in 2010).
  • Significantly fewer transactions covered present and past compliance in a "compliance with law" representation (down to 33% in 2012 from 73% in 2010).

Conditions to Closing 

  • Transactions continued the trend away from requiring delivery of a legal opinion (non-tax) of target's counsel at closing (down to 19% in 2012 from 27% in 2010).


  • The use of both "no other representations" and non-reliance clauses increased to 35% in 2012 from 25% in 2010 (neither clause was included in 35% of transactions in 2010 and in 28% of transactions in 2010).
  • The most common survival period for breaches of non-fundamental representations and warranties continued to be 18 months (44% of transactions in 2012; 34% of transactions in 2010).
  • Breach of seller's or target's covenants as a carveout from the survival limitations was used in a significantly fewer transactions (down to 35% in 2012 from 77% in 2010); same was true for fraud (down to 42% in 2012 from 82% in 2010).
  • More baskets were set at a lower percentage of the transaction value (56% of baskets were 0.5% of the transaction value or less in 2012, compared with 41% in 2010).
  • Fewer transactions used baskets for breaches of covenants or other indemnity claims (27% and 18%, respectively, in 2012, and 42% and 39%, respectively, in 2010).
  • Certain basket carve-outs were more common in 2012, including carve-outs for broker's/finder's fee (up to 59% in 2012 from 43% in 2010), capitalization (up to 68% in 2012 from 60% in 2010), and due organization (up to 62% in 2012 from 49% in 2010). Fraud was a basket carve-out in only 61% of transactions in 2012, down from 90% in 2010.
  • The use of mini-baskets (i.e., thresholds for claims eligible for indemnification) increased to 30% in 2012 from 17% in 2010.
  • Of those transactions with baskets, significantly fewer included a "double materiality" scrape (down to 28% in 2012 from 49% in 2010), and when included, the "double materiality" scrape was limited to calculation of damages/losses only in 41% of transactions completed in 2012, down from 66% of transactions completed in 2010.
  • Median cap on indemnification remained the same in 2012 as in 2010 (i.e., 10% of transaction value).
  • Among transactions with survival provisions, a larger percentage required that the buyer mitigate losses (up to 44% in 2012 from 28% in 2010).

Dispute Resolution

  • Fewer transactions with general Alternative Dispute Resolution provisions provided that the loser pay arbitration expenses (down to 15% from 38%).

For additional information about this topic, please contact any of the authors.

Related Professionals

Related Services


Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.