Thomas W. Christopher and Alexander B. Johnson are partners at Latham & Watkins LLP. This post is based on a Latham memorandum by Mr. Christopher, Mr. Johnson, David S. Allinson, Joshua M. Dubofsky, Austin Ozawa, and Nineveh Alkhas. Related research from the Program on Corporate Governance includes Allocating Risk Through Contract: Evidence from M&A and Policy Implications by John C. Coates, IV (discussed on the Forum here).
Buyers in M&A transactions should consider a number of due diligence items in response to COVID-19 and the governmental response thereto.
As parties pursue mergers and acquisitions transactions during, and in the wake of, the COVID-19 pandemic, both buyers and targets should consider a number of factors from a due diligence perspective, including the impact of COVID-19 and related developments on the target from a legal, compliance, human resources, business, insurance, financial, and operational perspective. This post identifies some of the issues buyers should consider when undertaking legal due diligence in connection with an M&A transaction, and highlights for targets some of the types of due diligence questions they may need to address.
Due Diligence Considerations
As with any due diligence investigation, due diligence related to the COVID-19 pandemic should be tailored to the particular target company. Accordingly, the applicability of each of the topics discussed below will likely vary based on the particular target company, its industry and geography, and a number of other factors.