For a deal to cross the finish line, experienced M&A professionals rely on months of painstaking planning and due diligence. In deals involving private target companies, an important part of that due diligence is analyzing previous “peer” transactions, or closed transactions that fit a similar mold to the transaction on the table. For deal-term negotiations between buyers and sellers, deal parties and their counsel often start with peer transactions to draft provisions on everything from financial and indemnification terms to closing conditions and dispute resolution provisions.
During these negotiations, one of the issues that is usually debated is what deal terms are standard in the market. In these talks, deal parties often have to rely on surveys that aggregate terms from previously closed transactions. The limitation, however, is that much of this data is based on a limited range of deals that are not always reflective of the transaction at hand.