Tag archives: JP Morgan

Summarizing the 2018 M&A Holdback Escrow Study

One of the common tools to mitigate transaction risk is a holdback escrow, where the buyer can retrieve funds in escrow if the seller fails to meet certain terms of the purchase agreement. There are numerous benefits to holdback escrows, such as broad claim coverage, publicly-available payout statistics to assist with cost estimation, and shared risk between buyer and seller.

For practitioners curious about how best to structure holdback escrows in their deals, J.P. Morgan’s 2018 M&A Holdback Escrow Study summarizes recent holdback escrow trends by analyzing 3.5 years of its M&A transactions containing these provisions:

  • Amount in escrow: The
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Investor confidence, disruption risk and US tax reform will continue to spur M&A activity

JP Morgan recently released its 2018 Global M&A Outlook report, predicting that 1) investor confidence from solid GDP growth, 2) disruption risk from technological change, and 3) opportunities from the passing of the US tax reform will drive significant M&A activity in the year ahead.

Investor confidence

In 2017, nine out of ten equity sectors in the US achieved positive returns.  The strong equity performance was driven by several factors, including:

  • strong corporate earnings growth across sectors (apart from the energy sector);
  • historically low interest rates;
  • low unemployment rates and improving GDP growth; and
  • increasing consumer and business confidence.
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Cross border M&A in 2017

Following the surge of mergers and acquisitions in the final quarter of 2016, many attempted to predict whether 2017 would follow suit. For instance, the Financial Times anticipated that the increase in mergers and acquisitions would carry into 2017. Similarly, JP Morgan forecasted that companies would adapt and cross-border deals would continue to surge, despite political changes and uncertainty, such as the Brexit referendum and the change in administration in the United States. In fact (and as predicted), the growth of cross-border transactions has been significant. Bloomberg Law reported that in 2017 thus far, there has been a total of … Continue Reading

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