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As take privates continue to play a meaningful role in
sponsor-backed transaction activity, below we compare key deal
terms from sponsor-backed take private transactions announced in
2024 to those announced in 2025 (through May 2025). While the pace
of sponsor-backed take-private deals has somewhat slowed, the below
analysis reveals that many of the differences in deal terms across
the two periods are modest. However, in some cases, we observed
meaningful differences in deal terms across the two time periods
which may suggest evolving market dynamics worth monitoring.
CLUB DEALS
Club deals are complex, as they involve multiple transactions
within a transaction, both to execute the take private and to
organize the business effective as of closing. Club deals accounted
for 29% of sponsor-backed take privates in 2024, reflecting a
willingness among sponsors to partner on large transactions and
driven in part by the resurgence of the so-called “mega
deals” (deals of at least $1 billion). By contrast, we have
only observed one club deal so far in 2025, suggesting a possible
shift toward single-sponsor funded transactions (and perhaps
smaller transactions), though the trend may normalize as the year
progresses.
SPECIFIC PERFORMANCE
In 2024, the “specific performance lite” construct
(allowing the target to compel sponsor’s equity financing only
if buyer’s debt financing is available) reemerged as the
preferred market remedy to address an acquirer’s financing
failure and a target’s closing risk in sponsor-backed going
private transactions, due in part to the increase in debt-financed
transactions. Among 2024 deals, 28% provided for full specific
performance (whereby the target can force a closing upon
satisfaction or waiver of the applicable closing conditions,
regardless of whether an acquirer’s debt financing is
available) while 71% contemplated specific performance lite. As we
predicted in Weil’s 2024 Going Private Study, the prevalence of
specific performance lite over full specific performance has
continued in 2025 – with 11% of deals contemplating full specific
performance and 78% using specific performance lite. This seems to
indicate a continued, and perhaps growing, ability of sponsors to
limit financing risk.
REVERSE TERMINATION FEES
The average reverse termination fee (“RTF”) as a
percentage of enterprise value and equity value in 2024 was 5.1%
and 7.1%, respectively. For 2025 deals, those averages
significantly declined to 4.3% and 6.5%, respectively. The mean RTF
of 4.3% of target enterprise value is much lower than expected, and
moreover, much lower than the mean amounts observed over the past
few years (since 2018, the mean RTF as a percentage of enterprise
value has been between 5 and 6% except in 2021 where it exceeded
6%). While these changes may normalize as the year progresses, they
may reflect slightly more sponsor-favorable risk allocations or
changes in deal leverage.
GO-SHOPS
Go-shop provisions appeared in 20% of 2024 deals and 22% of 2025
deals. The negligible increase suggests continued selectivity in
their use, which is typically tied to the target’s process. As
we’ve previously noted in our annual Weil Going Private Study,
the use of go-shop provisions in take private transactions
generally fluctuates over time due to the fact specific nature of
whether a target company’s board feels compelled to include a
go-shop provision, which is often driven by the extent to which the
company has engaged in a pre-signing market check.
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