Sometimes “topics” are “trending” and we do not even know why. The current you-know-what pandemic may affect business owners, employees and investors whose transactions are “in the works”. What may happen to those pending deals?
- One or more parties may get cold-feet and seek to terminate the deal. If legally-binding agreements are in place, must the parties proceed to close?
- For deals that are at the discussion stage or those without legally-binding documents, there is a chance – – good or bad – – for the terms to be revisited.
- The spread between the parties’ respective valuations of the company or project may widen. Familiar valuation devices like EBITDA and revenue multiples, and comparable sales reviews, will receive attention.
- The deal’s pace and timetable may change. Some deals can wait and some cannot.
- Transactions based on projections of revenues, cash flow or other metrics may be revisited.
- Post-closing adjustments, hold-backs, claw backs and “baskets”, as well as post-closing performance metrics, could affect the transaction or the prospects of breaches or adverse results after the completion of the deal.
Interestingly, companies who show strong sales, revenues or cash flow may be particularly attractive as targets or transaction parties and may thus “rise above the noise”. These companies could be especially attractive targets or powerful acquirors in the weeks and months ahead.
Questions? Please feel free to give Laberee Law PC a call at 609 654 0003.