A year has passed since the credit crunch first struck last summer, and we thought it useful to review developments in U.S. M&A transactions. Here are some interesting comparisons between the 12-month period from August 2006 – July 2007 and the 12-month period from August 2007 – July 2008:

  • The average size of the ten biggest deals announced during the later period decreased to $15.1 billion from $22.7 billion in the earlier period. No financial buyer deals were in the top ten, compared with eight such deals in the earlier period.
  • Break fees and reverse break fees remain in line with historical levels and do not seem to have increased in spite of the recent wave of deals that have been terminated or renegotiated.
  • Financing conditions appeared in app. 15.2% of deals involving financial buyers, an increase from approximately 9.8% during the earlier period.
  • The percentage of deals with go-shops fell from approximately 10.6% in the earlier period to 7.1% in the later period, possibly reflecting uncertainty among dealmakers as to their efficacy or longer deal timelines where full, pre-signing sale processes are possible and go-shops unnecessary.
  • The percentage of tender offers has increased over 170%, and in the later period, 100% of such deals had top-up options.

* * *

More detailed statistics follow below. We note that the sample size of deals in the postcrunch period remains relatively low. As such, it is difficult to assess whether these statistics and observations are enduring trends or are merely reflective of current uncertainties and dislocations in the financial and M&A markets. Questions regarding the items discussed in this update should be directed to members of the Paul, Weiss M&A Practice Group. This memorandum is not intended to provide legal advice with respect to any particular situation and no legal or business decision should be based solely on its content.

Click here to see the statistics.