CMS European M&A Study 2021

Europe has returned to a ‘buyer-friendly’ environment, after the COVID-19 pandemic created more risk-averse attitudes. As a result, CMS’ latest annual M&A study identified significant increase in liability caps, longer limitation periods and fewer locked box deals.

The multi-year analysis of the key legal provisions within M&A agreements is the most comprehensive of its kind and is based on a proprietary database comprising more than 5,000 deals.

The study reveals that the primary deal driver for transactions continues to be buyers entering a new market (45%), a marginal decrease on 2019 (46%). Almost a third (31%) of all deals were either the acquisition of know-how or acqui-hire transactions, whilst 22% of deals were the acquisition of a competitor.

Louise Wallace, Head of the CMS Corporate/M&A Group, said:

It comes as no surprise that the first half of last year was difficult for dealmakers, with more delays and renegotiation of terms. But it was perhaps not as gloomy as many feared – we saw a strong recovery towards the end of 2020 and many corporates have confidently adapted their processes to the continued uncertainty and early shoots of ‘new normal’. The strength of equity capital markets and the resilience of private equity, with trillions of dry powder, indicates there should be an increase in transaction volumes – all of which makes us hopeful about the future of deal activity in Europe.
Louise Wallace

Stefan Brunnschweiler, Head of the CMS Corporate/M&A Group, said:

Deal volumes aside, the dynamics of deal terms playing out should be watched closely. Up until 2020, Europe has been regarded as favouring the seller. This year, we are seeing far more ‘buyer-friendly’ positions – a similar risk allocation to across the pond in the US.
Stefan Brunnschweiler

Signals of more ‘buyer-friendly’ trends include:

  • Longer limitation periods – there was an increase in limitation periods of 24 months or more (23% of deals – up 4% from 2019)
  • Increase in liability caps – the level of liability caps applying to transactions increased significantly in 2020. There were fewer deals where the cap was less than 50% of the purchase price – down to 49% from highs of 60% in 2017 – and we saw more deals where the liability cap was equal to the purchase price
  • Use of locked box transactions – slight decrease in non-PPA deals (51% in 2020 vs 56% in 2019, although the overall upward trend remains
  • De minimis and basket provisions are the market norm – applying in majority of transactions (74% and 68% respectively vs 73% and 66% in 2019)

Other key findings include:

  • Steady use of Warranty & Indemnity (W&I) insurance – popularity of W&I insurance dropped off in 2020 by 2% (down to 17%), though it was still used in almost half of transactions over EUR 100m
  • Gradual decline of purchase price adjustments (PPAs) – a small decrease in the use of PPAs in M&A agreements (44% compared with 45% for 2019), suggesting parties are seeking more certainty as to the amount of the purchase price when signing transaction documentation
  • Earn-outs remain consistent – Despite the anticipaton of more earn-outs due to COVID-19, there was little change albeit at 21% of deals. This is above the average level of the last decade, though still less popular than use in the US

Regional differences

The COVID-19 pandemic has triggered a shift in favour of the buyer in Europe, similar to the US where more ‘buyer-friendly’ positions are common. However, market practice in Europe relating to PPA has remained consistent in the 44-45% range for the past three years. This is a noticeable difference to the US where a PPA features in almost all deals (95%).

The analysis also revealed marked differences in market practice between the European regions:

  • The UK used PPAs in 54% of transactions, well ahead of France (36%) and Benelux countries (34%).
  • CEE and the Southern European countries have significantly higher liability caps (67% and 76% of transactions respectively had a liability cap of more than 50% of the purchase price), compared to the European average of 43%.
  • The take up of W&I insurance cover remains low in France, Benelux, and the Southern European countries – ranging from 5% to 20% – and has dropped off significantly in the UK (from 37% in 2019 to 27% in 2020).
  • Locked boxes dropped off significantly in the UK (30% vs 61% in 2019) but not in other European countries.
  • There was a large increase in the use of earn-outs in CEE with 20% of transactions compared to 8% in 2019 – more in line with the European average of 21%.
  • Limitation periods for warranty claims are much longer in CEE, France and the Southern European countries.
  • Arbitration was used as the dispute resolution mechanism in a third (32%) of deals. It was less popular in certain regions (UK, France and Benelux) than others (CEE, German-speaking and Southern European countries).

Download the report here: cms.law/int/publication/cms-european-m-a-study

Anderson Mori & Tomotsune Future Working System

In response to the spread of the 2019 coronavirus disease (COVID-19), our firm has set up a response team to deal with any new developments. We have taken advance measures in consideration of the safety of our clients, business partners and personnel. In light of the government having lifted the state of emergency declaration across Japan on March 21, we will implement the following measures from March 22 (Mon).

Combination of Increased Frequency of Personnel Coming to the Office and Working from Home

With effect from March 22, 2021 (Mon), we will slowly increase the percentage of our personnel working in the office. Simultaneously, our personnel will still be able to work from home to the extent that it does not interfere with their work.
Even in the case of working from home, you may still contact the office email address and the direct phone number of the attorney or patent attorney in charge of your matter. We may not be able to answer your call in a timely manner, but we will return your call wherever possible.

Non face-to-face Conferences and Meetings

We will continue to conduct conferences, internal meetings and external meetings with clients non face-to-face (by online or telephone conference, etc.) as much as possible. In addition, we will also refrain from holding face-to-face seminars.

Recommendation for staggered working hours and thorough implementation of measures to prevent the spread of COVID-19 such as by having our personnel wear a mask at all times

We will thoroughly implement measures to prevent the spread of COVID-19, such as ensuring that our personnel take their temperature before coming into the office, recommending our personnel stagger their working hours when going back to work in order to avoid rush hour, having our personnel wear a mask at all times in the office, having them wash their hands and use hand sanitizer, and ensuring that social distancing is carried out.

We apologize for any inconvenience that this may cause our clients and business partners, and we kindly ask you for your understanding.

Our firm will continue to promptly implement measures based on the policies and action plans of the national and local governments, giving the highest priority to preventing the spread of COVID.

COVID-19 comes to an end – Extension of Limitation

In view of the outbreak of COVID-19 pandemic in March 2020, the Supreme Court of India by an order dated March 27, 2020 extended the period of limitation prescribed under the general law or special laws with effect from March 15, 2020 till further orders.

On March 5, 2021 the Supreme Court reviewed its decision and observed that in view of the changing scenario relating to the pandemic, the extension of limitation has served its purpose and should come to an end.

Accordingly, by an Order dated March 8, 2021 (https://main.sci.gov.in/supremecourt/2020/10787/10787_2020_31_1501_26732_Judgement_08-Mar-2021.pdf) the Supreme Court has directed that in computing the period of limitation for any suit, appeal, application or proceeding, the period from March 15, 2020 till March 14, 2021 shall stand excluded. Consequently, the balance period of limitation remaining as on March 15, 2020, if any, shall become available with effect from March 15, 2021.

In cases where the limitation have expired during the excluded period, all persons shall have a limitation period of 90 days from March 15, 2021. The Supreme Court also clarified that this order shall apply to limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.

Jon Crain Named to Albany Business Review’s 40 Under 40

Whiteman Osterman & Hanna partner Jon Crain has been named to the Albany Business Review’s 40 Under Forty for 2021.  Jon joined Whiteman Osterman & Hanna in September 2013 and is a trial lawyer and commercial litigator in the Firm’s Litigation and Appeals Practice Group.  Jon has successfully litigated and arbitrated a broad range of matters, including corporate shareholder disputes, litigation regarding trade secrets and proprietary business information, commercial real estate and construction litigation, First Amendment and constitutional claims, business-to-business collection and breach of contract claims, and complex personal injury and products liability actions.  Jon also has successfully litigated numerous administrative proceedings on behalf of both corporate and individual clients, including land use, zoning and commercial development litigation.

40 Under Forty identifies and recognizes young business and community leaders throughout the Capital Region. The list of 40 honorees were selected from more than 250 nominations.  For more on this year’s honorees, please click here.

Nominate Today – Global Awards 2021

Leaders in Law is delighted to announce that we are taking nominations for our upcoming Leaders in Law – Global Awards 2021.

If you would like to be considered / nominate a peer, please fill in the nomination form on Nominate Today – Leaders in Law (leaders-in-law.com)

Competition Law the Acceleration of Trade Digitalization

Competition Law the Acceleration of Trade Digitalization

To read the full report click here

This note seeks to provide an overview of some of the key recent developments in the area of competition law with regards to the challenges brought about by the Covid-19 pandemic (“the pandemic”) and the disruption induced by digitalization and online marketplaces.

More specifically in this report you will find the following topics:

  • Legal Basis
  • The Response to the Pandemic
  • The Consequences to the Market
  • The Role of the Member States

Competition law and policy continue to be crucial in steering the healthy and fair recovery of businesses from Covid-19. The rapid and in some cases instant switch from partial to complete digitalization, delivery apps, and online marketplaces, has brought forward a series of new challenges for the competition authorities. These challenges need to be addressed properly, minimizing the risk of negative market distortions in the EU.

For more information please contact us at: info@americanoslaw.com

Banco Chambers Adopts Workplace Conduct Policy

As part of our commitment to ensuring respect and safety in the workplace, Banco Chambers has enacted a Workplace Conduct Policy. The Policy makes clear that bullying, discrimination, sexual harassment, and vilification is not tolerated at Banco Chambers.

The Policy offers support and flexibility to individuals who wish to make a complaint. A person can speak to either a designated contact person at Banco Chambers (Cameron Moore SC or Tiffany Wong SC) or an appointed external consultant (Louise Morrow, Clinical Psychologist). In recognition of the broad range of circumstances that can give rise to a complaint, similar flexibility is also incorporated into the complaint resolution processes available, including formal and informal processes depending on the nature and gravity of the complaint.

Workplace Conduct Policy

Workplace Conduct Policy Fact Sheet

External Consultant
Louise Morrow
Email
0408 448 326

Further information about Banco Chambers’ policies is available on our policies page.

Hogan Lovells to launch Office in the Irish Capital

International law firm Hogan Lovells is opening an office in the Irish capital of Dublin, it announced today.

The new office will initially focus on financial regulatory and antitrust work, with a number of the firm’s lawyers based in London, who specialise in these areas, relocating to Dublin.

Christopher Hutton, Hogan Lovells’ new Dublin office managing partner, said in a statement:

“Putting clients at the centre of everything we do is a strategic priority for the firm, and having a presence in Dublin is about doing just that. Hogan Lovells opening an office there is welcomed by our existing clients, and also presents new opportunities. I am excited to head up the firm’s new offering in Ireland.”

Hogan Lovells hasn’t ruled out offering training contracts or opportunities for trainees to be seconded to the Dublin office. “We would not rule anything out if the right opportunity arises,” a spokesperson for the firm told Legal Cheek. “Staffing and recruitment [including secondments] will be driven, as always, by the needs of our clients and the business.”

Hogan Lovells is the latest law firm to set up a base in Dublin. Ashurst opened an office in Dublin earlier this month, while Dentons launched in the Irish capital last year.

Thousands of solicitors from across England and Wales registered in Ireland in the wake of the 2016 Brexit vote to maintain their EU practice rights. The Law Society of Ireland delivered a blow in the autumn when it said they won’t be entitled to qualify in Ireland unless they have a physical presence in the country.

Other international firms that opened Dublin offices in the aftermath of the Brexit referendum include DechertDLA PiperFieldfisher and Pinsent Masons. It’s likely several other firms will follow suit so they can continue to practise in Europe.

Maxwell Chambers Appoints New Chairman

Maxwell Chambers announced today the appointment of Mr. Daryl Chew as the Chairman of the Board of Directors.

Acclaimed as “one of the brightest” and “most highly regarded” partners in the Asia Pacific region by Who’s Who Legal, Mr. Chew brings more than 12 years of experience in international dispute resolution and is the Managing Partner of Shearman & Sterling’s Singapore office. He acts as counsel and arbitrator in arbitrations involving a wide range of applicable laws, arbitral rules and seats, with a focus on construction, energy, mergers and acquisitions, joint venture and general commercial disputes. Mr. Chew is the Co-Chair of the Young SIAC (YSIAC) Committee and also serves on the Singapore Management University School of Law Advisory Board and various other governmental, international and regional arbitration organisations and committees.

“I am honoured by the appointment and privileged to have the opportunity to serve an institution that is not only a lodestar for its counterparts in the region and across the globe, but which also has immense significance to me as a dispute resolution practitioner in Singapore.

Over the past decade, Maxwell Chambers has become an unmistakable feature in the international dispute resolution landscape; it has cemented Singapore’s position as a leading global dispute resolution hub. I am especially grateful to Philip for his leadership over these years, which has seen Maxwell Chambers go from strength to strength.

Maxwell Chambers is now an icon for ADR practitioners both in Singapore and abroad. I personally have vivid memories of the days on end spent in hearings on those premises. But as we navigate a more complex, postpandemic global landscape, where virtual meetings and hearings are more commonplace, I look forward to building on our solid foundations and collaborating with management and the Board to develop a shared vision for the next chapter.

We will remain singularly focused on refining our core offerings to add value and meet the diverse, evolving needs of users in the global ADR community. We are also committed to expanding our global footprint, adopting innovative and transformative technologies and exploiting greater synergies within the unique ecosystem of ADR stakeholders both within and outside of Maxwell Chambers.

This is an exciting time for Maxwell Chambers and the ADR community in Singapore and globally as arbitration continues its steady growth trajectory. We will continue our engagement and collaboration with our partners and stakeholders as we pivot to the future.”

Mr. Chew succeeds Mr Philip Jeyaretnam SC, who was recently appointed as a Supreme Court Judicial Commissioner. Under Mr Jeyaretnam’s leadership, Maxwell Chambers, an integrated alternative dispute resolution complex located in Singapore, has grown into a leading facility providing a range of custom-designed and fully equipped hearing rooms.

Of the 34 legal entities housed in Maxwell Chambers, there are 12 international institutions, of which 6 have case management offices, forming the highest concentration within such a facility in the world. These include the Singapore International Arbitration Centre, the Singapore International Mediation Centre, the International Chamber of Commerce International Court of Arbitration, the Permanent Court of Arbitration, the World Intellectual Property Organisation Arbitration and Mediation Centre, and the American Arbitration Association International Centre for Dispute Resolution.

In 2019, Mr Jeyaretnam championed the expansion at 28 Maxwell Road, Maxwell Chambers Suites, which now houses the local offices of top international ADR institutions, chambers, law firms and ancillary services.

Additionally, in 2020, Maxwell Chambers joined the Arbitration Place of Toronto and Ottawa and London’s International Dispute Resolution Centre to launch the International Arbitration Centre Alliance, a hybrid physical and virtual hearing platform, aimed at addressing distance, time-zone, and other challenges associated with planning and conducting international arbitration hearings in the wake of COVID-19.

The new £50 note featuring Alan Turing to be released in June

The new £50 note featuring Alan Turing is coming on 23 June 2021. Find out what it looks like and how the security features make it hard to counterfeit: New50.co.uk #TheNew50