The European Deal Terms Report 2026 (DealSuite) analyses how M&A transactions are structured legally across the European SME and mid-market, focusing on the key provisions included in Share Purchase Agreements.
The report is based on data from 942 M&A legal firms across Europe, covering transactions completed between July 2025 and June 2026.
Its main conclusion is that European M&A transactions are increasingly incorporating mechanisms to manage risk and bridge valuation gaps between buyers and sellers. Vendor financing is becoming more significant, earn-outs are lasting longer, and buyers are placing greater emphasis on contractual protections.
1. Key findings at a glance
| Deal term | 2026 findings | Change vs. 2025 |
| Partial acquisitions | 21% | Up from 13% |
| Transactions including earn-outs | 38% | Down from 39% |
| Transactions including vendor loans | 36% | Up from 34% |
| Both earn-out and vendor loan | 26% | Down from 28% |
| Earn-outs lasting over 12 months | 69% | Up from 61% |
| Transactions with conditions precedent | 81% | Up from 74% |
| Transactions with warranties | 98% | Broadly stable |
| SPAs including indemnities | 86% | Up from 81% |
| Transactions with non-compete clauses | 95% | Almost universal |
2. Purchase price structure: vendor financing gains importance
Earn-outs and vendor loans remain widely used mechanisms to bridge valuation gaps and share transaction risk.
- 38% of transactions include an earn-out (39% in 2025).
- 36% include a vendor loan (34% in 2025).
- 26% combine both mechanisms (28% in 2025).
One particularly interesting development is the increasing size of vendor loans: the proportion covering more than 20% of the purchase price rose from 24% to 31%.
Earn-outs are also becoming longer-term instruments:
- 69% now last more than 12 months, compared with 61% in 2025.
- The most common duration is 13–24 months (43%).
- Earn-outs lasting less than six months fell sharply from 16% to just 4%.
EBIT/EBITDA remains the main performance metric used to calculate earn-out payments.
Key takeaway: Sellers are increasingly helping finance transactions, while buyers and sellers are using longer earn-out periods to manage valuation uncertainty and post-acquisition performance risk.
3. Conditions precedent: more protection for buyers
The proportion of transactions including at least one condition precedent increased from 74% to 81%.
The most common conditions include:
- Successful completion of due diligence.
- Third-party and regulatory approvals.
- Bank financing.
- Material Adverse Change (MAC) clauses.
Two developments are particularly noteworthy:
- MAC clauses increased from 53% to 61%.
- Bank financing conditions decreased from 68% to 62%.
The report suggests that sellers are increasingly helping fill financing gaps themselves, for example through larger vendor loans.
Key takeaway: Buyers continue to seek protection against unexpected developments, but seller financing is reducing the reliance on bank financing as a condition to closing.
4. Warranties: almost universal protection
Warranties remain standard practice, appearing in 98% of transactions.
The most common areas covered are:
- Balance sheet accuracy: 96%.
- Absence of undisclosed legal claims: 95%.
- Accuracy of information provided: 95%.
- Personnel-related matters: 88%.
Personnel warranties experienced the largest decline, falling from 95% in 2025 to 88% in 2026.
Key takeaway: Warranties remain a fundamental component of European M&A transactions, providing buyers with contractual protection regarding the company’s financial, legal and operational position.
5. Indemnities: increasing focus on GDPR and data privacy
Indemnities are becoming more common, with 86% of SPAs now including at least one, compared with 81% in 2025.
The most common indemnity areas are:
- Tax matters: 87%.
- Risks identified during due diligence: 59%.
- Data privacy and GDPR: 42%.
- Pension liabilities: 19%.
The most significant change concerns data privacy and GDPR indemnities, which increased from 30% to 42%.
Key takeaway: Tax remains the dominant indemnity area, but data protection and GDPR compliance are becoming increasingly important sources of contractual risk allocation.
6. Securities: escrow gains ground
Buyers increasingly use different mechanisms to ensure sellers can meet potential post-closing claims.
The main developments are:
| Security mechanism | 2026 | 2025 |
| Solvency maintenance statements | 73% | 71% |
| Holdbacks | 36% | 32% |
| Offsets against vendor loans | 34% | 32% |
| Escrow arrangements | 21% | 16% |
| Bank guarantees | 17% | 18% |
| Personal guarantees | 15% | 22% |
The most significant trends are the increased use of escrow arrangements and the decline in personal guarantees.
The report also highlights the growing adoption of M&A insurance in the SME segment, traditionally more common in larger transactions. Such insurance can help sellers limit their liabilities while reducing friction in warranty and indemnity negotiations.
Key takeaway: Security mechanisms are evolving towards more structured solutions, with escrow and M&A insurance gaining relevance.
7. Non-compete clauses: standard practice
Non-compete clauses appear in 95% of European mid-market transactions.
Their duration is distributed as follows:
- 12–24 months: 61%.
- More than 24 months: 34%.
- Less than 12 months: 5%.
The distribution is broadly stable compared with 2025.
These clauses typically protect the buyer’s investment in goodwill, customer relationships and the acquired company’s market position. They are often accompanied by non-solicitation provisions covering customers and employees.
8. Overall conclusions: What does this mean for SFs?
Although the report covers the broader European SME and mid-market rather than SF transactions specifically, several findings are particularly relevant:
1/ Vendor financing is becoming an increasingly important acquisition tool.
The rise in vendor loans covering more than 20% of the purchase price (31%, versus 24% last year) suggests that sellers are playing a greater role in financing transactions. This is particularly relevant for Search Funds, which often face constraints in terms of available equity and bank financing.
2/ Earn-outs are increasingly used to bridge valuation gaps.
With 69% of earn-outs lasting more than 12 months, buyers and sellers are increasingly sharing the risk associated with future business performance. This can help Searchers reconcile differences between their valuation expectations and those of business owners.
3/ Financing certainty remains a major transaction issue.
The decline in bank financing conditions, combined with the increase in vendor financing, suggests that alternative financing structures are becoming more important in getting transactions across the finish line.
4/ Due diligence and contractual protection remain essential.
The increase in conditions precedent (81%) and indemnities (86%) reinforces the importance of thorough due diligence and appropriate risk allocation. GDPR, tax and undisclosed liabilities deserve particular attention.
5/ Escrow and M&A insurance could become more relevant in smaller acquisitions.
The increasing use of escrow arrangements and the growing availability of M&A insurance offer additional tools to manage post-closing risks and facilitate negotiations.
These trends point towards an M&A environment where the purchase price is increasingly becoming a negotiated structure rather than simply a fixed amount paid at closing.
For Searchers, understanding how to structure vendor loans, earn-outs, deferred consideration and appropriate contractual protections is becoming an increasingly important part of acquisition execution.
Source: Dealsuite, European Deal Terms Report 2026, October 2026.
