PPP Financing in M&A Transactions

A live 90-minute premium CLE video webinar with interactive Q&A

Wednesday, March 3, 2021

1:00pm-2:30pm EST, 10:00am-11:30am PST

Early Registration Discount Deadline, Friday, February 5, 2021

or call 1-800-926-7926

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 various 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, prior lender and SBA consent will likely be required. Such a consent process may dictate the ability to keep the loan in place and delay the parties' desired timeline for the transaction. Buyers and sellers may need to consider structural alternatives 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 several alternative options for accommodating pending or future forgiveness applications depending on the parties' intentions. Given the SBA's heightened scrutiny of forgiveness applications, buyers seeking to acquire a PPP borrower should evaluate the borrower's compliance with PPP loan terms, including the target's eligibility, taking into account the SBA's affiliation rules and whether the necessity certifications were appropriate. If applicable, the seller should be required to complete a Loan Necessity Questionnaire on the form prescribed by the SBA.

Buyers should consider requiring reps and warranties regarding PPP compliance and indemnities from the seller, especially when the valuation of a target company hinges on the forgiveness of an outstanding PPP loan. In turn, the seller might require post-closing covenants to ensure the buyer will seek forgiveness and 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. Impact 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 the lender's and/or SBA's 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 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 concerning a PPP loan and structure contractual recourse, including representations and warranties and indemnities, to both mitigate compliance risk and preserve the value attributable to forgiveness?


Budreika, Andrew
Andrew T. Budreika

Morgan, Lewis & Bockius

Mr. Budreika advises clients on private equity transactions, domestic and cross-border public and private mergers 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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