May 3, 2024
Study: Private Target Deal Terms
SRS Acquiom recently released its annual M&A Deal Terms Study for 2024 (available for download). This year, SRS Acquiom analyzed more than 2,100 private-target acquisitions that closed from 2018 through 2023. Here are some of the key findings summarized in the introduction:
– Strategic buyers (both U.S. public and private) were more active in 2023, with a corresponding substantial drop by U.S. private buyers backed by private equity (e.g., portcos).
– “GAAP consistent with the target’s past practices” is for the first time no longer the majority practice when establishing the accounting methodology for PPAs; the “worksheet” approach is now used on more than one third of deals. The median size of separate PPA escrows has now reached 1% of transaction value.
– One third of 2023 deals included an earnout, which is more than a 50% increase year over year (close to one fifth of deals in the previous three years included an earnout). The amount of contingent consideration tied to earnouts also ticked up slightly.
The study dedicates a slide to additional information on each of these points, plus valuation, deal structure, deal escrows, indemnification and RWI.
– Meredith Ervine