Drafting With Confidence
Learn how to maximize efficiencies across all four corners of the merger agreement drafting workflow.
Drafting With Confidence
With predictions for a busy M&A year ahead, transactional attorneys can thrive in a resilient industry.
Learn how to maximize efficiencies across all four corners of the merger agreement drafting workflow: reviewing, drafting, writing, and negotiating.
Market Performance Highlights M&A Resilience
The M&A market’s performance last year was impressive, considering the extraordinary hurdles to successfully closing deals that arose as a result of the pandemic.
<b>See more deal activity analysis and what to expect in 2021.</b>
A Positive Outlook for M&A in 2021
Despite the complications and business disruptions caused by the global pandemic and the wider economic downturn, pending and completed M&A deal volume dropped only 7% in 2020.
“The impressive number of M&A deals that made it to the finish line in 2020, as well as a typical number of deals that fell apart, is cause for optimism,” wrote Grace Maral Burnett, legal analyst on Bloomberg Law’s transactional team, in a recent analysis. “They paint a picture of how resilient the M&A market and dealmakers have been amid this pandemic.”
M&A resilience has occurred on several fronts. The number of terminated M&A deals for the control of a company or assets valued at
$1 million or more was lower than the total number of deals terminated in 2019.
“As a percentage of all completed and terminated deals combined, [this was] only a modest increase of less than 1% in terminated deals,” compared to the year prior, Burnett wrote.
Also, dealmakers did not disproportionately choose domestic over cross-border deals last year compared to pre-pandemic times. In all, completed deals in 2020 saw an 18% decline from the 2019 total.
The M&A market’s performance in 2020 was particularly notable “considering the extraordinary hurdles to successfully closing deals that arose as a result of the pandemic,” Burnett wrote.
Source: Bloomberg as of 1/4/2021. The data set includes deals involving the acquisition or sale of control in a company or asset for strategic purposes valued at $1M or greater for which a definitive agreement was entered into by the parties and which were either completed or terminated between 1/1/2019 and 12/31/2020. The data is sorted by completion/termination date, not date of announcement.
With the new year underway, the M&A forecast for 2021 deal activity is strong. And as M&A deal flow continues at pre-pandemic rates, transactional attorneys will continue to face the ever-present challenges of keeping their contract drafting workflows efficient, which, in key part, includes quickly and effectively tracking market standards.
The search for benchmarking information can be elusive and time-intensive, and existing workflows and tools can leave deal attorneys feeling insecure about their drafting decisions. To meet expectations and strengthen confidence both in the drafting and negotiating of agreements, attorneys must broaden their current approach to M&A drafting workflows.
The impressive number of M&A deals that made it to the finish line in 2020, as well as a typical number of deals that fell apart, is cause for optimism.”
Grace Maral Burnett, Bloomberg Law Legal Analyst
Are Data-Gathering Inefficiencies Slowing You Down?
The search for market standard language can be manual, time-consuming work. With smaller data sets, insights are often anecdotal, and the risk of making extrapolated guesses runs high.
<b>Learn about the top workflow challenges
M&A attorneys are facing.</b>
Inefficiencies Put Unnecessary Strain
on Merger Workflows
Not surprisingly, draft recipients and those who hold the pen alike express a lack of comfort with current drafting workflows. In a 2020 Bloomberg Law survey of 138 law firms and in-house attorneys who spend at least 20% of their time on M&A tasks, more than half had concerns about the division of labor for drafting principal agreements
in M&A deals.
In a sentiment often shared by other legal professionals, 35% of in-house respondents said they would prefer to assume more or all the main transaction document drafting. But workload and staff constraints were impediments, the survey found.
There is no better illustration of drafting inefficiencies than the quest to identify market-standard language for particular clauses. In a scene familiar to transactional attorneys, the search for market-standard language can be manual, time-consuming work, as associates scour transaction after transaction.
While the approach holds merit, aggregating and analyzing EDGAR filings or previous agreements from a firm’s own database cannot definitively address whether draft language represents “the market” or is similar to even a large number of comparable deals.
Because of smaller data sets, insights are often anecdotal, and the risk of making extrapolated guesses runs high. The data gathered is also frozen in time, further compromising the integrity of market-standard analysis. And existing technology to support this work often falls short.
Here’s the good news: Many of these challenges can be addressed without abandoning industry best practices.
Bloomberg Law’s Draft Analyzer broadens the toolkit available to lawyers working on M&A transactions to maximize efficiencies across all four corners of the merger agreement drafting workflow: reviewing, drafting, writing, and negotiating.
Draft With Greater Confidence
The right technology makes your workflow more efficient by minimizing the effort required to find the precise language your agreement requires.
<b>See how it saves you time, helps you focus on what’s important, and ensures you’ve covered all the bases.</b>
Attorneys leveraging Draft Analyzer can extract three main benefits: (1) streamlined review and navigation, (2) integrated drafting guidance, and (3) the ability to instantly benchmark draft language against the thousands of merger agreements filed in EDGAR.
Following a simple document upload or drag and drop, the tool provides a three-panel interface that streamlines navigation. Specifically, the display provides an interactive clause outline on the left, the uploaded draft in the
middle, and multilayered Practical Guidance on the right.
From there the user can navigate around the document with ease, surface terms defined by the agreement with a click of the mouse, review Practical Guidance at the transaction or clause level, and compare their draft to the market, all within a single interface.
Because it’s designed to analyze confidential attorney work product, Draft Analyzer was built from the ground up with multiple layers of
safeguards in place to protect the integrity and privacy of uploaded content.
The user’s uploaded document is encrypted in transit and at rest and only temporarily stored on Bloomberg-controlled servers, not a cloud or third-party site. The encrypted document is automatically deleted when the analysis is complete.
As a final layer of security, any encrypted data that may have been extracted from the document – including things such as file names and any associated metadata – are automatically deleted from our system as well.
Because of these strict security protocols, Bloomberg Law could not use any user-uploaded text or data for any purpose other than providing the analysis to the user even if we wanted to.
Draft Analyzer harnessed the power and resources available through Bloomberg Law and puts them all into one screen centered around the actual transaction document you are working on. It is easy to navigate and access helpful material to assist in the review and drafting process.”
Associate, Am Law 100 firm
Five Features to Improve Your Workflow
Our AI-powered tool will reduce the time you spend drafting merger agreements and give you a high level of confidence in your finished product.
<b>Learn more about the five integrated features that allow you to stay on task with one tool on one research platform.</b>
1. Interactive Clause Outline
Merger agreements are often a challenge to navigate. Even if sections are numbered or lettered, the text often remains unwieldy and unstructured, typically running dozens of pages.
Draft Analyzer easily addresses this common navigation challenge. Upon document upload, a clause outline of the entire merger agreement is displayed in the left panel. Each section of the clause outline is hyperlinked. By clicking, the user can quickly jump to a given section and clause.
Once the user clicks on a clause, the far-right panel, titled, “About this Clause,” identifies the clause type.
I would have the confidence with this tool to ensure that all important steps and terms were reviewed, and that we would know what is market for similar deals. This tool will save time and expenses – and ensure completeness.”
Associate General Counsel, Financial Services
2. Definition Extraction
Skilled transactional attorneys never assume to know a definition. Even terms such as “knowledge” should be verified to ensure the attorney understands the context. This can be an arduous task considering the number of defined terms in a typical agreement.
Draft Analyzer's definition extraction feature saves you time by speeding up document navigation. All definitions within the document are hyperlinked allowing users to surface them with a single click.
Draft Analyzer also identifies the section where the term is defined, such as in the preamble, clause, or other given section. It also allows users to click on other defined terms used within a particular definition, surfacing layers of definitions with ease.
3. Market-Standard Analysis
True workflow efficiency rests upon the ease with which Draft Analyzer surfaces market-standard language without reliance on additional internal or external staffing sources.
With the click of a button, this feature offers real-time insights into market criteria – specifically, how this clause is most commonly enunciated in merger agreements filed in the EDGAR database.
Behind the scenes, Draft Analyzer uses machine learning and natural language processing to group thousands of clauses of a particular type from merger agreements filed in EDGAR into semantically similar buckets. The algorithm then identifies the largest bucket and finds the centroid, or clause most like all the other clauses in that bucket, to represent the market standard.
Filters allow users to manipulate the analysis to identify the market standard for deals mirroring the circumstances of their transaction.
Users can analyze clauses within deals by industry, year, transaction amount, and private or public acquisition target types. In effect, users can focus on clauses within agreements most relevant to their deal particulars and quickly review market developments related to certain clauses.
In all, insights on the market standard at the clause level allow users to benchmark themselves against the market and better assess their position. Through real-time insights, each party can better prepare and respond to drafts, as well as strengthen negotiation positions.
4. Individual Paragraph Analysis
Whereas the market-standard analysis feature attempts to identify and analyze the market at large, the individual paragraph analysis capability offers insights into how others are drafting language similar to the user’s text.
Driven by machine learning, the tool examines a particular paragraph against similar paragraphs within other merger agreements. With a click, users can discover how their text compares to linguistically similar paragraphs filed in the EDGAR database.
To start, the feature surfaces a comparison map with a grouping of clustered language most like the examined text. As a result, users have an easy means to assess how draft language compares to clusters of similar language in other relevant deals.
For further analysis, the feature offers a redline comparison of a given paragraph. The three-panel display has the original paragraph on the left, the redline comparison in the middle, and the composite paragraph on the right. This allows users to home in on the most subtle linguistic differences in drafting.
Data-driven insights into how others have crafted similarly worded sections in their merger agreements can prompt swift yet informed action. For example, if analysis reveals a term is not common in other semantically similar provisions, the user may decide to strike the term. Alternatively, the variation may confirm the wisdom of a lesser-traveled M&A approach.
5. Integrated Practical Guidance
With Bloomberg Law’s vast digital library of M&A-specific guidance integrated into Draft Analyzer, the user never has to exit the system to access sample agreements, document descriptions, drafting guides, checklists, topical overviews. This is all presented in a step-by-step format that provides users guidance from early stages of the deal, through to drafting the agreement and on to closing.
On a more granular level, Draft Analyzer surfaces Practical Guidance on specific clauses. Upon selecting a clause, Practical Guidance appears related to the provision at hand. This is where analysis deepens. In addition to describing the purpose of the clause, this clause-level guidance provides insights into the buyer and seller perspectives.
Drafting agreements requires a deft, balanced combination of intuition and market-standard insight, culled from benchmarking data and laser-sharp analysis. In this way, the well-worn path of aggregating and reviewing similar deals as part of merger agreement workflow cannot be abandoned.
Draft Analyzer widens the means for crafting and analyzing merger agreements with greater speed and precision.
Accelerate the drafting process, improve document navigation, and identify market-standard language with Draft Analyzer.
