Corporate & Securities Law

Using the ABA?s Deal Points Studies

By Ken Adams

One of the more useful perks of being a member of the American Bar Association is that you get access to the “Deal Points Studies” prepared by the Section of Business Law’s Committee on Mergers and Acquisitions.

There are various Deal Points Studies; I’ve recently consulted the 2008 Strategic Buyer/Public Target M&A Deal Points Study and the 2007 Private Target Deal Points Study. (Because the Deal Points Studies can be accessed only by those who’ve joined the Committee on Merger and Acquisitions, I haven’t provided links.) Each study presents a statistical breakdown of how key provisions are treated in a sample of publicly available contracts.

The value of the Deal Points Studies is that they give me a much better sense of M&A drafting trends than I could get by doing my own rooting around on the SEC’s EDGAR system.

But bear in mind that the Deal Points Studies are descriptive rather than prescriptive?in some of the contracts in a given sample the drafters may have made use of a certain provision, but it doesn’t follow that that provision makes sense.

For example, both studies that I looked at show what proportion of the contracts in the sample contained a bringdown condition crafted so as to eliminate double materiality. It so happens that double materiality is a figment of practitioner imagination: it’s based on a misunderstanding of how materiality operates. It should come as no surprise that caselaw makes no mention of materiality. (For more on double materiality, see MSCD 8.48?51. It’s too convoluted a topic to describe here.)

So by all means consult the Deal Points Studies, but don’t adopt uncritically the provisions they describe.

Full post as published by AdamsDrafting on January 13, 2009 (boomark / email).