PPP Financing in M&A Transactions

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Wednesday, September 2, 2020

Recorded event now available

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Program Materials

This CLE webinar will provide an overview of the factors to consider in structuring, negotiating, and executing an M&A deal involving a PPP loan. The panel will review key issues such as how to treat an outstanding PPP loan balance in a transaction, issues regarding loan forgiveness, and the importance of evaluating and addressing risk regarding a target borrower’s compliance with PPP loan terms.


The PPP and other CARES Act loan programs implemented in response to the coronavirus pandemic have a variety of implications on pending and potential M&A transactions.

If a PPP loan is already in place, then the parties must consider whether an M&A transaction involving the borrower could trigger a default under a PPP loan. If the parties desire to keep the loan in place post-closing, then prior lender and SBA consent will likely be required. Such consent process may dictate the ability to keep the loan in place and may also delay the parties’ desired timeline for the transaction. Depending on the dynamics of the transaction, interesting structural alternatives may arise between buyers and sellers in order to accommodate leaving a PPP loan in place in connection with an M&A transaction.

For transactions in which a PPP loan remains in place post-close, there are a number of alternative options for accommodating pending or future forgiveness applications depending on negotiating leverage and the parties’ intentions.

Buyers seeking to acquire a PPP borrower should test as part of its diligence exercise the borrower’s compliance with PPP loan terms, including the eligibility of the target taking into account the SBA’s affiliation rules and whether the necessity certifications were appropriate. Buyers should consider requiring reps and warranties regarding PPP compliance and indemnities from the seller, especially in a situation where the valuation of a target company hinges on the forgiveness of an outstanding PPP loan. The seller, in turn, might require post-closing covenants to ensure the buyer will seek forgiveness and to prevent the buyer from taking courses of action that may negatively impact forgiveness.

Listen as our authoritative panel discusses these and other issues essential to address when one of the parties to a merger has a PPP loan in place.



  1. Treatment of a target's outstanding PPP loan
    1. To repay or not to repay
    2. Options for handling PPP forgiveness
    3. Effect of PPP on net working capital
  2. Identifying and protecting against relevant PPP loan risks
    1. Due diligence and risk identification
    2. Seller representations
    3. Indemnification and risk allocation
  3. Financing considerations and lender insights
    1. Consents/waivers
    2. Financing conditions


The panel will review these and other key issues:

  • When is lender and/or SBA consent to the acquisition of a PPP borrower required, and what is the process for obtaining such approval?
  • How should buyers and sellers approach transaction structuring in order to preserve the value of potential forgiveness of the PPP loan in the context of an M&A transaction?
  • How should buyers conduct due diligence with respect to a PPP loan and structure contractual recourse, including representations and warranties and indemnities, in order to both mitigate compliance risk and preserve the value attributable to forgiveness?


Galbraith, Lauren
Lauren Wansor Galbraith

Morgan Lewis & Bockius

Ms. Galbraith focuses her practice on a broad range of corporate and transactional matters, including public and...  |  Read More

Hamilton, Jacquelynne
Jacquelynne M. Hamilton

Morgan Lewis & Bockius

Ms. Hamilton is part of a team that focuses on diverse transactions, including mergers and acquisitions, joint...  |  Read More

Jagota, Mehar
Mehar Jagota

Morgan Lewis & Bockius

Mr. Jagota focuses his practice on mergers and acquisitions, private equity, venture capital, securities, and general...  |  Read More

Rocks, Andrew
Andrew P. Rocks

Morgan Lewis & Bockius

Mr. Rocks counsels clients on a wide variety of business law matters, focusing on public and private mergers and...  |  Read More

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