Conducting Due Diligence
It can be easy to get excited about the opportunity to merge with or acquire another company, especially if the target has valuable government contracts. An acquisition or merger has the potential to bring about unanticipated economic and legal consequences, however, so you must fully evaluate the legal implications and risks that may come with going through with the transaction.
Our national Veterans mergers and acquisitions attorney can help you assess all potential issues, including:
- How government security clearances held by the target company will be transferred
- How intellectual property rights held by the target company will be transferred
- Contractual or regulatory non-compliance perpetrated by the target company
- Prior suspensions or debarments that may impact the target company
- The target company’s past performance ratings issued by government agencies (and how those scores will influence the company’s ability to obtain future contracts)
- Financial consequences of the target company’s existing and potentially forthcoming contracts
- Whether subcontracts and other agreements held by the target company must be honored following the transaction
- A change of status (such as a loss of “small business” status) resulting from the transaction that could influence the target company’s ability to obtain future government contracts
- The existence of any conflicts of interest that could preclude your company from pursuing future government contracts
A thorough due diligence study will identify all potential adverse impacts of the proposed merger or acquisition. Each party should also provide sufficient disclosures and indemnifications.
Proactively resolving these issues before agreeing to and completing the transaction is paramount. For example, you must solicit and obtain all necessary government approvals before any government assets – including assets that require security clearances – are transferred. Failing to do so could not only lead to the invalidation of the contract (and an inability to secure future contracts) but also result in liability exposure. Depending on the circumstances, the merged business could face civil and even criminal penalties.
With so many regulations and considerations, it can be easy to become overwhelmed and unsure of how to proceed. Fortunately, our team at The Veterans Advocacy Law Group is here to help Veteran-owned businesses manage each stage of these transactions and avoid common mistakes. No matter your industry, the size of either company, or the complicating factors involved in the potential deal, we will provide the knowledgeable guidance you need to safely facilitate your merger or acquisition.
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