Mergers, Acquisitions, Alliances and Restructurings
Thorough due-diligence is arguably the most critical step in the merger and acquisition process. While any acquisition is risky, an acquisition of a government contractor is more so. In addition to – or because of – risks inherent to traditional mergers and acquisitions, government contractors are increasingly considering a variety of business combinations, alliances and restructuring options to help them achieve or maintain competitive advantage. These options include strategic sourcing and partnering, collaborations and co-production agreements, teaming arrangements, and joint ventures. They also may include corollary activities such as internal or external restructuring, reductions-in-force, and plant closures.
These types of transactions and changes can be complicated and risky for any business. But government contractors face the added challenges of complex cost accounting and pricing regulations and customers bound by terms of complex contract administration regulations. Government contractors may need specialized assistance to identify and effectively address potential indemnities, cost recovery and contract pricing challenges, and other risks that require determining a purchase price, equity stake, or other financial arrangement.
Our professionals apply their combined accounting expertise and in-depth knowledge of government contracting regulations to perform extensive financial due diligence. This level of industry-specific expertise during the due diligence process will provide the information companies need to reasonably assess its potential partner’s contract-related financial and regulatory compliance risks. Then we help identify the specific risks that may require contractual coverage such as excluded assets, indemnifications, representations, and warranties. Also, we can assist companies in drafting accounting instructions to calculate the closing balance sheet and any post-close purchase price adjustments.
In some cases, disputes may arise over calculations of the purchase price adjustment or alleged violations of representations and warranties. We can help a company and its legal counsel to identify the facts and circumstances, provide expert opinions, and quantify the damages.
