Tuesday, April 9, 2013
Schulte Roth & Zabel has released this client alert containing the highlights from its most recent study on private equity buyer acquisitions of U.S. public companies with enterprise values in the $100-$500 million range ("middle market" deals) and greater than $500 million ("large market" deals). During the period from January 2010 to Dec. 31, 2012, SRZ identified a total of 40 middle market deals and 50 large market deals that met these parameters. Here are SRZ's key observations from the study:
1. Volatility in the number and terms of middle market deals makes it more difficult to identify "market practice" in that segment.
2. Overall, middle market deals took significantly longer to get signed than large market deals.
3. "Go-shop" provisions were used more frequently in large market deals, even though, overall, the percentages of middle market and large market deals in which a pre-signing market check was used are comparable.
4. While it is virtually the rule (92% of the time in 2012) in large market deals that the target will have a limited specific performance right against the buyer, the full specific performance remedy is still used quite often (44% of the time in 2012) in middle market deals.
5. While the frequency with which middle market deals use reverse termination fees ("RTFs") has converged on large market practice, the size of RTFs has not.
6. Large market deals are much more likely than middle market deals to limit damages for buyer’s willful breach to the amount of the RTF.