In today’s very active M&A market, there is increasingly more common ground in much of the legal documentation on matters including risk apportionment and price adjustment. In this report, Bird & Bird reviews the key trends and legal issues around acquisitions and disposals.
Key points include:
Overall caps on liability: In the UK it is still common for the financial cap to be between 90-100 percent of the purchase price on smaller transactions. However, there is an increasing trend towards buyers accepting a lower limit on the higher value deals.
Time periods: It is common in most M&A transactions to have time limits on the buyer's ability to bring claims. These are often between 12-24 months after completion for general warranty claims, and between 4-7 years for tax warranties and the tax covenant.
Purchase price adjustments: It is very common for an M&A agreement to include a price adjustment mechanism. Bird & Bird's London Corporate fee earners reported that 78% of transactions in the last 12 months have involved some form of adjustment.
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