M&A Study reveals US deals differ significantly in their construction from those in Europe
Information contained on this page is provided by companies via press release distributed through PR Newswire, an independent third-party content provider. PR Newswire, WorldNow and this Station make no warranties or representations in connection therewith.
SOURCE CMS Legal Services
CMS publishes 5th European M&A Study
FRANKFURT, Germany, March 18, 2013 /PRNewswire/ -- In a review of 1,700 deals done between 2007-2012, CMS' fifth annual M&A Study shows that there are key differences in the risk allocation between the US and Europe – reflecting interesting cultural and regulatory variations in the markets.
"Now in its fifth year, the M&A study is fascinating reading for businesses looking to do deals across borders, and understand the norms in other countries," said Cornelius Brandi, Executive Chairman of CMS. "It exemplifies the value that CMS delivers to clients in providing both multi-national expertise and a deep understanding of the issues that drive businesses today."
Thomas Meyding, Head of CMS Corporate Group, comments, "Our analysis of the deal structures chosen illustrates very different behaviours on either side of the Atlantic. Attitudes to risk and reward vary significantly and this is clearly shown by the legal provisions that are used."
For example, MAC clauses are much more popular in the US (being used in 93% of deals) than in Europe where they only appear in 14%. Another sizeable difference exists in the use of working capital adjustments as a criterion for purchase price adjustment, used in 77% of cases in the US as opposed to just 34% in Europe. The explanation for this may simply be the diversity that one sees in 50 different countries as opposed to 50 different states in one country.
Other key findings include:
Earn-out deals are more popular in the US. 38% of US deals had an earn-out component compared with just 16% in Europe in 2012.
Not only are baskets much more prevalent in the US, but the basis of recovery is different. In the US, 62% of relevant deals are based on 'excess only' recovery as opposed to 'first dollar' recovery compared with only 29% in Europe in 2012 for 'excess only' recovery.
Basket thresholds tend to be lower in the US with 88% being less than 1% of the purchase price compared with 49% in Europe and that is probably because there is less payback for purchasers because of the prevalence of "excess only" recovery.
Meyding concludes, "Europe may not seem as exciting as some of the emerging economies, but there is no doubt that US businesses are certainly keeping an eye out for opportunities there.
"There are, however, good reasons for optimism in 2013. Many corporates have strong balance sheets and access to cash. Private equity owners always need to realise investments at certain stages of their life cycle and many are nearing the end of their investment holding period. Many US corporations are increasingly ready to make acquisitions, including European acquisitions, as they benefit from US energy self-sufficiency and lower energy costs."
NOTES TO EDITORS
CMS lawyers immerse themselves in their clients' business. This enables them to deliver the most effective legal and tax solutions. Both leading domestic and major global corporations work with CMS´ 2,800 lawyers across 54 offices in Europe, Russia, China, North Africa and South America. Clients select CMS because it has the most extensive footprint in Europe of any firm. CMS provides local and industry sector insight, global project management and its specialist teams work hard to add value to their projects, wherever they are taking place. Established in 1999, CMS today comprises ten member firms, all experienced in their local jurisdictions. This expertise means that clients receive high-quality advice in the local context. CMS firms posted a combined turnover of EUR 808m in 2011. For more information, please visit www.cmslegal.com.
By: Kayla Bremer email@example.com Thousands kicked off Memorial Day weekend by heading out to the Hot Rod Super Nationals. It's the 5th year of the event in Lincoln, and a wet start to the day didn'tMore >>
Thousands kicked off Memorial Day weekend by heading out to the Hot Rod Super Nationals at the Lancaster Events Center.More >>
By: KLKN Newsroom firstname.lastname@example.org Power has been restored to nearly 4,000 customers in Lincoln. Lincoln Electric System says power was out for about two hours this morning in two separate areas at 13thMore >>
Power has been restored to nearly 4,000 customers in Lincoln.More >>
By: KLKN Newsroom email@example.com OMAHA, Neb. (AP) - Nebraska Gov. Dave Heineman says he will not run for U.S. Senate, making the race to replace Republican U.S. Sen. Mike Johanns wide open. Heineman madeMore >>
Nebraska Gov. Dave Heineman says he will not run for U.S. Senate, making the race to replace Republican U.S. Sen. Mike Johanns wide open.More >>
By: Jenn Schanz firstname.lastname@example.org Memorial weekend at Branched Oak Lake last year was packed, crowded with nonstop camping action. That's what kiosk worker Kile Willet says. This year, he's not soMore >>
Memorial weekend at Branched Oak Lake last year was packed, but due to gas prices and predicted rain, this year might be different. More >>
By: Cole Miller email@example.com Workers at Beatrice High School are cleaning up a big mess. Someone spread birdseed all over their new football field and getting it out is not easy task. SomeoneMore >>
Superintendent Roy Baker says clean-up is costly and those responsible will turn themselves in.More >>
By: Brittany Paris firstname.lastname@example.org Three grades, three weeks of testing, 64,000 students. The state's writing test results are in, result the state board of education says are better than ever. TheMore >>
Three grades, three weeks of testing, 64,000 students. The state's writing test results are in, result the state board of education says are better than ever.More >>
Posted By: KLKN Sports Sports@klkntv.com A trial date has been set in Lancaster County Court for Husker defensive lineman Avery Moss. Moss previously pled "not guilty" to public indecency and disturbingMore >>
A trial date has been set in Lancaster County Court for Husker defensive lineman Avery Moss. More >>
Posted By: Newsroom email@example.com Lincoln Police arrested the 67-year-old man after they say he pulled a gun on a car dealership employee. William Strain was arrested Friday morning at Husker AutoMore >>
Police say the man was upset about his service contract.More >>