COVID-19 Coronavirus: Mergers and Acquisitions

Although deal volume has already started to decrease as a result of the impact of COVID-19, some sale processes remain ongoing. As a result of the measures put in place globally to control the spread of the virus, buyers need to ask relevant questions of their targets to fully understand how they are dealing with the current situation and their plans to mitigate any delayed impact that it could have. 

Read our guidance: Implications for Due Diligence (U.S.) - March 31, 2020

In the wake of the COVID-19 pandemic and its continuing impact on global financial markets, executing M&A deals at the right price has, almost overnight, become more challenging than ever. This OnPoint explores certain strategies to bridge valuation gaps, including classic earn-out mechanisms, the increasing prevalence of toe-hold and minority positions and other valuation trends observed in the Asian markets in the early days of the Coronavirus outbreak.

Read our guidance: Valuation Gaps and Due Diligence in M&A Deals (Global) - March 30, 2020

While language addressing COVID-19 has been included in a few agreements to date, the typical language requiring MAEs to be company-specific raises doubts about any buyer’s ability to cite the pandemic as a basis for terminating an agreement.

Read our guidance: “Material Adverse Effect” Provisions (U.S., UK and Europe) – March 16, 2020