The latest updates and analysis from Morrison Foerster
May 12, 2020 - Mergers & Acquisitions, Coronavirus

M&A Considerations Regarding CARES Act Loan Programs and Other Relief

Another Ticking Clock: Additional District Court Preliminarily Enjoins EO 14042 | Increasing Need for OMB Update on GA Court Clarification Order

In recent weeks Congress has authorized funding for a number of programs intended to provide relief to small- and medium-sized businesses and certain particularly hard-hit industry sectors, as well as to American businesses more generally. The parties to a potential M&A transaction must be careful to ensure that their transaction activities do not inadvertently alter eligibility status for federal programs or otherwise run afoul of program requirements. For acquirors, thorough M&A due diligence in this environment must include a review of pre-acquisition loan, tax, and compensation activity connected to these relief packages. In addition, the parties to an M&A transaction should clearly allocate the risks related to altered eligibility status and other risks related to these programs in their definitive transaction documentation. This client alert will provide an overview of the type of government assistance that is available, and implications in the context of M&A activity.

Read our client alert here.