In the mergers and acquisition space, COVID-19 triggered many material adverse change clauses and scuttled many transactions. Whether they are re-cutting old deals or crafting new ones, vendors and acquirers (and their advisors) will have to think creatively about how to bridge the price expectation gap. Price will likely be a blend of “pre-COVID” and “post-COVID” valuations and earn-outs and other forms of delayed consideration will become even more common.
Vendors and acquirers (and their advisors) will also have to carefully consider who, between signing and completing, should bear the risk of these uncertain times. More than ever, the key to getting the deal done will be to remain focused on solving problems, rather than finding them.
Luke Jedynak is a Senior Associate in the firm’s corporate and commercial team. He works for a diverse range of commercial clients,
including ASX 100 companies, private equity firms and large privately-held businesses.