Tuesday, April 30, 2013
Shareholder Representative Services has just released a new report, its 2013 M&A Post-Closing Claims Study. The report is based on a review of claim activity in 420 private company transactions over the past year. Two thirds of deals had post-closing issues to report. Some of the study's key findings:
- Earn-out milestones for tech and other deals outside of life sciences were achieved 50% of the time
- 18% of deals had at least one claim made in the final week of the escrow period.
- Final escrow releases were delayed due to claims in 30% of deals.
- 73% of deals with post-closing purchase price adjustment mechanisms saw adjustments, which were more often buyer-favorable than seller-favorable. 27% of adjustments were ultimately modified from the initial amount claimed.
- 10% of earn-out milestones that were initially claimed as missed eventually resulted in a payout for shareholders.
- Tax claims became more frequent due to the average target being a more mature taxpayer. In addition, state and local governments have become more aggressive about revenue collection, especially for sales and use taxes.
Give it a download.