Tariff-Related Risks in M&A: Impact on Deal Activity, Valuation and Due Diligence; Negotiating Key Deal Terms

Description

The uncertainty of the second Trump administration's trade policies and tariffs have slowed the pace of global M&A activity with many active deals being delayed or paused. Tariffs impact many facets of an M&A deal, including product demand and profit margins, making it increasingly difficult to accurately value a business.

Parties contemplating M&A transactions must address tariff implications throughout their deal negotiations. This includes performing focused due diligence on tariff-related risks with a target's inputs and outputs and supply chains as well as the availability of alternative suppliers and manufacturers in areas with less tariff liability.

Counsel and deal parties will also want to address tariff-related risks at the letter of intent stage and in acquisition agreements. Some key considerations when negotiating deal terms include purchase price adjustments, representations and warranties, interim operating covenants, material adverse effects, tariff-related conditions, and transaction completion deadlines.

Despite the uncertainty of the current global M&A market, a merger or acquisition can be a key strategy for navigating the complex geopolitical landscape by leveraging a more favorable business environment in areas less impacted by tariffs.

Listen as our expert panel reviews the current global M&A landscape and provides guidance for mitigating tariff-related risks and navigating the uncertainty of the ever-evolving geopolitical environment.