– The Contract Network (TCN) an AI-powered contract collaboration platform, today announced the release of its transformative case study, “NDA Moneyball: The Results of M&A NDA Negotiations Don’t Change.” The case study, facilitated by The Contract Network’s innovative use of generative AI to analyze over 20,000 anonymized M&A NDA negotiation points, challenges traditional views on negotiation power dynamics in middle-market M&A. The case study reveals that buyer “markups” of draft agreements are highly consistent, as are the final outcomes of the negotiations. The study concludes that utilizing market data at the outset of an NDA process could eliminate over 80% of NDA negotiation points, without compromising the substantive requirements of either party.
To conduct the study, TCN collaborated with industry leaders such as the US corporate practice of Eversheds Sutherland, one of the top 10 M&A law firms globally, and Integreon, a worldwide provider of tech-enabled legal, creative and business outsourced solutions, and other industry experts. The initial report focuses exclusively on middle market M&A NDA negotiations between sellers, including sell-side investment banks, and private equity funds, one of the most common forms of M&A negotiations.
To understand the underlying dynamics of the deal negotiations – what does each party require, prefer or simply permit – TCN analyzed anonymized collections of initial draft agreements, first-round buyer markups, and final outcomes from the negotiations. Contrary to popular belief that the power resides with the initial drafting party, TCN’s findings reveal an unexpected uniformity in the final terms of these agreements, despite their varied beginnings. For example, for one issue in the data set – “buyer retention of confidential information for regulatory purposes” – only approximately half of all sellers proactively addressed the subject in their initial draft agreements. Despite this drafting omission, this…
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