Three Ways to Draft M&A Agreements with Confidence

July 23, 2024

We’ve seen an unprecedented amount of M&A activity since 2021. With no slowdown in sight, transactional attorneys are turning to AI-powered tools to streamline workflows and mitigate risks in their contracts.

The search for benchmarking information is often 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 in both the drafting and negotiating of agreements, attorneys must broaden their current approach to M&A drafting workflows.

With predictions for a busy M&A year ahead, new approaches to contract drafting workflows can help transactional attorneys thrive. Here are three ways that Bloomberg Law’s Draft Analyzer can help attorneys streamline review and navigation, access integrated drafting guidance, and instantly benchmark draft language against the thousands of merger agreements filed in EDGAR.

[Watch our on-demand webinar Transforming M&A: AI Innovations for Legal Professionals to discover how AI is revolutionizing M&A practices.]

1. Monitor M&A trends

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.”

One post-pandemic trend to watch closely is the rise in SPAC mergers. As Burnett notes, a record number of publicly-traded special purpose acquisition companies entered into definitive agreements to take over private targets.

2. Examine data-gathering inefficiencies

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 M&A deals. But workload and staff constraints were impediments to taking on more work.

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There is no better illustration of drafting inefficiencies than the never-ending quest to identify market-standard language for particular clauses. In a scene familiar to transactional attorneys, the search for market-standard language can be time-consuming manual work, as associates scour transaction after transaction.

3. Harness the power of technology

Driven by machine learning and natural language processing, Bloomberg Law’s Draft Analyzer provides efficiencies and insightful analysis that help streamline an attorney’s workflow.

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.

Through its integrated features, Draft Analyzer helps M&A attorneys stay on task and utilize a single tool on one research platform:

Interactive clause outline

Once you upload a document, Draft Analyzer will display a clause outline of the entire merger agreement. Each section of the outline is linked so you can easily jump to a certain section or clause.

Definition extraction

Draft Analyzer identifies where each term is defined within an agreement, such as in the preamble or other clause, and links those definitions so they’re easily surfaced with a single click.

Market-standard analysis

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.

Individual paragraph analysis

Driven by machine learning, Draft Analyzer examines a particular paragraph against similar paragraphs in merger agreements filed in the EDGAR database. Users can discover how their text compares to linguistically similar paragraphs in other agreements.

Integrated guidance

With Bloomberg Law’s vast digital library of M&A-specific Practical Guidance integrated into Draft Analyzer, you can access sample agreements, document descriptions, drafting guides, checklists, or topical overviews without ever leaving the platform.