At Riveron, when looking at matters related to transaction tax, we have seen a marked increase in speed-to-close on an average M&A deal as well as an increase in sophistication of RWI policies and insurers. 

Report indicates the centrality of tax matters in RWI transactions

Interestingly, as the report below indicates, fast-paced transactions with cursory due diligence have resulted in more than twice as many claims for undisclosed liabilities in recent years. In addition, not only are indemnification claims bigger and taking longer to resolve, but tax claims dominate (notably, tallying at approximately 40%) in terms of breaches—mainly related to sales and use tax matters.

These trends are key reasons we’ve seen deal-savvy teams making sure that they tackle non-income tax matters, and it shows why a robust tax diligence team and processes are crucial in a transaction. Also, bear in mind that, as your counsel can advise you, those sales and use tax matters can carry over in an asset (or other type of) deal structure.  

The 2024 M&A Claims Insights Report provides analyses of earnouts and indemnification claims from more than 850 private-target acquisitions, valued at approximately $168 billion .... All deals examined in the report included escrows that were fully released between Q3 2022 and Q2 2024—including 518 individual indemnification claims and 200 earnout milestones.

https://www.srsacquiom.com/our-insights/ma-claims-insights-report-earnout-indemnification-data/