Proskauer Rose's "All Will Be Forgiven (or Not): What to Consider When Acquiring a Business with a PPP Loan" offers guidance on risk allocation to buyers and sellers of M&A transactions wherein the target is the recipient of an SBA Paycheck Protection Program loan. In addition to highlighting PPP loan provisions that may be relevant in the context of a contemplated or pending transaction, the memo offers alternative approaches to managing PPP loan risks via the transaction document's purchase price adjustments, indemnity provisions, covenants, and representations & warranties. The instructive guidance is broadly aimed at transactions involving (i) a merger or consolidation with respect to the PPP recipient, (ii) a sale or issuance of equity interests that results in the acquirer purchasing from the seller or the PPP recipient (as applicable) a significant interest in the PPP recipient, (iii) a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the PPP recipient, and (iv) investments, including growth-equity or similar minority stake investments in the PPP recipient.
Access additional resources on our Coronavirus (COVID-19) Resources page under M&A / Hostile Transactions / Antitrust and on our M&A, IPOs, Separations and Go-Private Transactions page. This post first appeared in the weekly Society Alert!