March 23, 2020

The spread of COVID-19 across the world is severely impacting daily life, bringing historic volatility to financial markets, and slowing business operations and international trade across industries.  In the United States, the states of New York, New Jersey, Connecticut, Pennsylvania, Delaware, Ohio, Illinois, Kentucky, Louisiana, Oregon and California have issued “stay at home” orders.  Other states have closed schools, banned gatherings of more than 10 people and implemented other social distancing policies, all in an effort to slow the spread of the virus.  Currently, no one knows how long these orders and policies will remain in place. 

In the M&A context, many companies are asking whether the effects arising from the COVID-19 outbreak have caused or will cause a material adverse effect (MAE).  This client alert analyzes the effects of COVID-19 under MAE provisions for M&A transactions that have already signed and discusses issues parties may wish to consider when completing due diligence and contract drafting for M&A transactions that have yet to be signed.

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