Bass, Berry & Sims attorney Tatjana Paterno was interviewed on the Deal Lawyers Download Podcast about the recent release of the American Bar Association’s (ABA) 2021 Private Target Deal Points Study, the preeminent study of mergers and acquisitions (M&A) transactions that were executed and/or completed during 2020 and the first quarter of 2021. Tatjana served as co-chair of the study alongside Jessica Pearlman, a partner at K&L Gates.
During the podcast, Tatjana and Jessica discussed:
- Universe of transactions and methodology for the Private Targets Deal Points Study.
- Noteworthy trends in deal terms.
- Trends in insured v. uninsured deals.
- Results that were a little surprising.
When asked about new data points in this year’s study, Tatjana mentioned the inclusion of data related to termination fees that was included for the first time ever – referencing that 22% of the deals in the study pool had termination fee provisions.
A surprising result from the study related to earnouts. As Tatjana discussed, “Earnouts actually went down during the period covered by the study. It went down from 27% to 20%. In the early days of the pandemic we all heard predictions that earnouts would be used more frequently to bridge the valuation gap. But it seems that those predictions really didn’t materialize.” Tatjana added, “In deals that did use earnouts, the parties were more likely to use revenue as a metric to determine an earnout payment, which is a seller-favorable metric. While the use of earnings, or EBITDA, which is a buyer-friendly metric, substantially decreased.”
The full podcast, “ABA Private Targets Deal Points Study,” was released on April 27 by the Deal Lawyers Download Podcast and is available online. To read additional insight from Tatjana about the Study, click here.