Companies and private equity funds looking to expand their portfolio by buying government entrepreneurs from SMEs should be very careful with due diligence, as such acquisitions are fraught with potential landmines that will slow down or even terminate the proposed deal. To acquire a company that holds government contracts, both parties must comply with numerous federal regulations before the government approves the transaction. The agency must recognize the buyer as a successor in the interest of the seller`s government contracts or subcontracts. All compliance obligations are transferred to a buyer, so the buyer must be able to fulfill its new compliance responsibilities to the satisfaction of employees of government contracts. Often, a buyer will provide the selling company with a letter of intent or a non-binding term sheet that lacks details about key terms and conditions. Large series buyers usually leave the impression that these preliminary documents are more of a formality in their process and therefore need to be signed quickly so that the buyer can immediately move on to the next "more important" steps in the M&A process (e.B due diligence and negotiation of final acquisition documents, including subsequent employment contracts). You want to investigate conflicts of interest regarding the capacity of the buying or selling company, especially with regard to government contracts. The selling company could have an institutional conflict of interest that could affect the buyer company`s ability to compete for contracts in the future. For example, if the seller had a significant role to play in negotiating or formulating the offer, this could affect its ability to compete again for that contract in the future. Thus, as a buyer, pay attention to institutional conflicts of interest that would prevent the selling company from being able to compete again in the future with the contracts it executes. In addition, AI can quickly identify all contracts that are expiring and automatically renewing in an acquired portfolio. Convenient dashboards and timely notifications can help legal departments and contract administrators ensure that nothing falls through the cracks in post-merger integration of companies.

Lawyers play a crucial role in how mergers and acquisitions are handled. As a small business owner considering a merger, you need to know things like due diligence, the valuation process, examples of representations and warranties, making the most advantageous sale, and more. This is not a business transaction that you want to carry out without sound legal advice. These twelve things we have just described will be included in the written text of this video, which you can follow and use for posterity. I also intend to get the audio of these videos in podcasts so you can review them later if necessary. My name is Joe Whitcomb. I have just touched on the twelve legal issues related to mergers and acquisitions which, while they do not apply only to government contractors, are certainly a priority for them. Of course, if you have any questions or concerns, we are a resource. We look forward to answering your questions. State-owned enterprises have merged and acquired significantly in recent years.

A flood of recent articles in the Washington Post and the New York Times have documented this. The acquisition of a company that has received a government contract often offers the buyer the opportunity to increase its market share and strengthen its capabilities within an existing industry. The addition could also allow the new parent company to expand its portfolio in the market and develop a new government procurement capacity that was not previously available. Richard V. Smith is a partner in orrick, Herrington & Sutcliffe`s Silicon Valley and San Francisco offices and a member of the Global Mergers & Acquisitions and Private Equity Group. He has over 35 years of experience in mergers and acquisitions, securities law and corporate law. Richard has advised more than 400 M&A transactions and has represented clients in all aspects of mergers and acquisitions involving public and private companies, including negotiated mergers, auction offers, cross-border transactions, sale of distressed assets, leveraged buyouts, takeover bids and exchange offers, private transactions, mergers of transactions between equals, hostile takeover bids, proxy contests, acquisitions and activist defense, purchases and sales of departments and subsidiaries and joint ventures. Our work includes reviewing government contracts, assisting with the terms of the government contract of the purchase or merger agreement, and preparing and reviewing schedules. Mergers and acquisitions of government contracts invariably require in-depth knowledge, for example, of the False Claims Act, small business recertification, supply chain issues, past performance rules, impact on foreign goods, export controls, aviation regulations, cybersecurity, and labor requirements. Our lawyers are familiar with all these issues.

In addition, our lawyers have experience in dealing with unique M&A challenges arising from the COVID-19 pandemic, including, for example, issues related to Paycheque Protection Program loans. We are also experienced in analyzing the impact of contract exchange provisions, exclusivity provisions and the most preferred pricing conditions, as well as in managing the FAR novation process. There are three well-known traditional ways to structure a M&A transaction, although companies have recently adopted different, more creative and flexible structuring methods. The three traditional ways to structure a M&A transaction are asset acquisitionAcquired asset acquisition is the purchase of a company by buying its assets instead of its shares. In most jurisdictions, the acquisition of assets usually involves the assumption of certain liabilities. However, since the parties can negotiate which assets will be acquired and which liabilities will be assumed, the transaction can be much more flexible, stock purchases and mergers. The methods can also be combined to achieve a more flexible transaction structure. Good contract management software can quickly integrate contracts purchased from any source and add them to the same central location where your company currently stores its contracts.

In addition, standardized, easy-to-use contract lifecycle management tools and processes across your organization make it easier for new teams to customize their workflows as needed. .