Is M&A Dead?

If so, did private equity kill it?

The large number of terminated and troubled private equity acquisitions has led to talk of a fundamental shift in the way M&A deals are structured. Sellers will demand tighter terms and more favorable contracts, which limit buyer optionality. In other words, MAC clauses will become narrower and reverse termination fees will go by the wayside. So far, this restructuring has not happened.

We are, though, beginning to see sellers request a higher price in exchange for heightened buyer optionality. For an example, take a look at Golden Telecom’s response document to the tender offer by Vimpel Communications to acquire all of Golden Telecom’s outstanding shares. In the section on the history of the transaction, Golden Telecom discloses a choreographed negotiation in which Golden Telecom received an increase in the consideration paid to its shareholders in exchange for providing greater optionality for VimpelCom to terminate the transaction for failure of financing. At least that is how it is portrayed… Read More.