If you are currently involved in or considering an M&A transaction you should be thinking about:

Exclusivity Periods: should be negotiated or extended to allow any delay in due diligence and negotiations flowing form the impact of the virus

Use Virtual data rooms: Parties should be looking to use a virtual data room that provides secure digital access and transfer of information for conducting due diligence to help reduce delays in due diligence activities and communications.

Material Adverse Change (MAC) clauses – MAC clauses are regularly used in M&A deals as a means by which the parties, particularly buyers are seeking protection if a target suffers from an economic or other material change.  The coronavirus threat is the type of risk that MAC clauses are designed to address. The MAC clauses give the buyer the right to terminate the purchase agreement prior to completion if the target business is materially and adversely affected by certain events occurring between a specified point in time and the intended completion date but can also act to give the seller some certainty in relation to what events are likely to fall within a MAC. The coronavirus could impact a target company’s revenues and liquidity, regulatory compliance, supply chain and staff. Where parties are seeking to include a MAC clause, the clause needs to be carefully negotiated between the parties. If you haven’t yet exchanged, consider including a MAC clause into the purchase agreement. If you have already exchanged and have a MAC clause review the provisions in the purchase agreement and assess the implications for any material adverse change that might result as a consequence of the coronavirus.

Warranties and/or Disclosures – both parties will want to look at what warranties can and can’t be given.  Where warranties are given by sellers, there will want to make sure that they can as far as possible disclose against them to limit their post exchange and/or post completion exposure to claims.

Purchase Price Protections – buyers should consider using completion accounts rather than locked box, or use of hybrid structure, where certain balance sheet items are tested as well as looking for greater use of deferred consideration, retention, earn-outs.

Delay exchange and/or completion – Assuming there are no other options, the parties may have no option but to consider delaying exchange and/or completion until they have been able to make a better assessment of the likely impact of the virus on the transaction.


For further advice on your corporate deal support please get in touch with:


For further support and advice relating to the impact of COVID-19, please view our COVID-19 Advisory Service page.

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