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Corporate deals and transactions

Given the potential business disruption initiated by the COVID-19 Coronavirus there are a number of considerations for M&A transactions:

Sellers may be worried about:

  • hitting financial targets on earn-out deals and/or
  • buyers not being able to pay earned earn-outs payments

Buyers considering their own solvency/cashflow in terms of earn out payments due over the short to medium term.

Regarding deal structures and pricing there may be material adverse change clauses and specific COVID 19 warranties/indemnities to consider.

Corporate finance

People may want to consider:

  • Down round, dilution and compensation issues
  • Aspects of valuation
  • Bridge (loan note) financing

Also, with regard to existing financing, you should review compliance with financial and other covenants in facility agreements and consider the impact of any event of default under financing arrangements.

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