Summary: Updating Disclosure Schedules: Market Trends

This is a summary of the Hotshot course “Updating Disclosure Schedules: Market Trends,” in which ABA M&A Committee members John F. Clifford from McMillan LLP and Ann Beth Stebbins from Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates discuss market trends for disclosure schedules updates provisions, drawing on data from the ABA M&A Committee’s 2020–21 Private Target Deal Points Study. View the course here.

Updating Disclosure Schedules: Market Trends

• The 2021 ABA M&A Committee’s Private Target Deal Points Study looked at how often parties allow updates to a seller’s disclosure schedules between signing and closing.
  • The study found that in 2020 and the first quarter of 2021:
    • Updates were expressly permitted or required in 24% of deals;
    • Updates were expressly prohibited in 5% of deals; and
    • The remaining 72% of deals were silent on the point.
• The number of deals allowing updates has been consistently less than half.
  • For example, in the 2018 to 2019 study, this number was 31%, and in 2016 to 2017 it was 28%.
• Of the deals that permitted or required updates in the latest study, there was an increase in those that allowed updates for information occurring both pre- and post- signing, from 51% in the 2019 study to 62% in the 2021 study.
• The buyer had a right to close and seek indemnification for updated matters in 90% of the deals that permitted or required updates.
  • There’s been a steady increase in that number—from 37% of deals in 2014, to 54% in 2016 to 2017, and 64% in 2018 to 2019.
• The buyer’s right to terminate the agreement was not affected by updated disclosure in 62% of the deals in the 2021 study.
  • In 24% of the deals, the buyer could terminate because of the disclosure, but only within a specific time period.
  • In 14%, the buyer had no right to terminate because of the new disclosure.

The rest of the video includes interviews with ABA M&A Committee members John F. Clifford from McMillan LLP and Ann Beth Stebbins from Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates.

Download a copy of this summary here.