November 8, 2021
M&A Agreements: What Will Next Year’s Deal Agreements Look Like?
A recent article by Bloomberg Law’s Grace Maral Burnett provides some thoughts on the evolution of acquisition agreements since the onset of the pandemic, and speculates on what issues might be addressed in those agreements next year. Here’s an excerpt:
As the pandemic continues to evolve, contract provisions will continue to do the same. One of the newer issues, which has only recently begun to show up in publicly available agreements, is Covid-19 vaccines. With government and corporate vaccine mandates increasing in prevalence, and the administration of Covid-19 booster shots just getting under way, agreements will increasingly need to address the vaccines—potentially in a wide range of provisions from representations and warranties to post-closing covenants. (By way of example, the definition of “fully vaccinated” could at some future time include the notion of booster shots or new health measures that protect workers against future variants, potentially impacting a variety of representations, covenants, and other provisions.)
With some pandemic issues, what we have seen is less evolution and more vacillation: the easing, then tightening, then easing again of health measures like masking and social distancing due to a variety of reasons, including the availability of new data and the emergence of new virus variants. Also, businesses are navigating a patchwork of conflicting guidance and best practices. This continuing state of change will undoubtedly impact how provisions, such as those regarding the ordinary course of business vis-à-vis Covid-19 and Covid-related exceptions to access-to-information covenants, are drafted. It could also impact how reasonableness is interpreted, as well as which, if any, reasonableness requirements parties elect to include in their references to Covid-19 responses.
The article discusses a number of different issues about the direction deal agreements may take. For example, it raises the question of when in the “new normal” parties won’t feel the need to address the pandemic in “ordinary course” covenants, and the potential impact of a – God forbid – worsening of the pandemic on MAE clauses, where pandemic exclusions have become customary.
– John Jenkins