We would like to present you a study from the workshop of our member CMS, which captures Deal activity across Europe. Deals maintained a steady pace in 2022 despite the increasing number of economic headwinds, according to the latest annual European M&A study by global law firm CMS

The study reveals that the main driver for transactions in 2022 was entry into new markets (39%), a slight drop from 43% in 2021. There was also a decline in deals involving the acquisition of a competitor from 32% in 2021 to 28% in 2022

Although last year saw much turbulence for M&A, there was still a strong desire to get deals over the line in all the key economic sectors. Therefore, it is reassuring that 2022 transpired to be a good year in the industry. However, the upheaval of last year will continue through 2023. Investor confidence has begun this year modestly, although it is expected to pick up in the second half of the year. Nevertheless, there remain many M&A opportunities in the CEE region, and hopefully the desire to get deals done that we saw last year will also continue during 2023.” Juraj Fuska, Partner at CMS Slovakia

Key findings:

  • MAC clauses: MAC clauses are still not very popular on European deals, with only 13% of deals having them. They are used even less on medium to large value deals. 


  • Earn-outs: The frequency of earn-outs has continued to rise, now applying in 27% of deals as compared to 14% in 2010 when CMS first analysed the use of earn-outs. This is coupled with a rise in the use of EBIT or EBITDA as the relevant measure for the earn-out applying in 54% of such transactions. 


  • Locked box transactions: For 2022, there was a more significant increase in the application of locked box arrangements (62% in 2022 compared with 51% in 2020). The increase is even higher for medium sized deals up to EUR 100m, where 79% of the deals were locked box transactions. This increase is even more marked when compared against the average usage of 51% for the period 2010 to 2021. 


  • Warranty & Indemnity (W&I) insurance: The popularity of W&I insurance has grown significantly over the last five years, particularly in the UK – albeit its application stabilised in 2022 at 32%. W&I cover is prevalent primarily in large deals with values over EUR 100m with W&I cover being obtained for 58% of those deals. The level of cover purchased varies, although a significant proportion of deals (nearly 40%) had cover of an amount equivalent to more than 30% of the purchase price.


  • ESG & sustainability: ESG factors in M&A are becoming more relevant and important. Investors are facing pressures to uphold higher governance standards across all industries and geographical regions. It also seems likely that dealmakers want to capitalise on attractive ESG value creation opportunities. However, ESG aspects are only just beginning to appear specifically as part of the due diligence process (33% of deals) and in transaction documents (45%).

Full report you can find in the attachment.