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Mergers and Acquisitions Attorneys

Navigating Mergers and Acquisitions To Help You Avoid Any Pitfalls and Issues

A Case Study

In September 2017, United Technologies and Rockwell Collins announced they had brokered a deal for United Technologies to acquire the airplane electronics and avionics parts manufacturer, Rockwell Collins for $30 billion. Through the transaction, UTC Aerospace Systems, which will be renamed Collins Aerospace Systems, will increase its aerospace capabilities and technology aerospace systems.

Also in September 2017, Northrup Grumman shared that it would acquire a rocket and defense contractor, Orbital ATK, for $7.8 Northrup's portfolio will expand to include a missile defense business and the ability to launch rockets that carry satellites into space.

Companies and private equity funds that want to expand their portfolios through the purchase of SMB government contractors must take particular caution through the due diligence process because such acquisitions are fraught with potential landmines that will slow or even terminate the proposed deal. To acquire a company that holds government contracts both parties must comply with many federal regulations before the government approves the transaction. The agency must recognize the buyer as a successor-in-interest for the seller's government contracts or subcontracts. All compliance obligations transfer to a buyer, therefore the buyer must be able to fulfill its new set of compliance responsibilities to the satisfaction of the government's contracting officers.

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Resolving Them is Key

The failure to resolve these types of issues and similar compliance issues can be catastrophic. There must be a detailed analysis and a plan to address any of the financial impacts of a status change that would be caused as a result of the merger or acquisition. All necessary government approvals must be obtained before the transfer of any government assets. The potential loss of business opportunities for the buyer or the merged new entity, and in particular in situations that can result in a suspension or debarment of the contractor, or civil and criminal penalties requires careful government contracts due diligence. An experienced law firm will quickly identify these and other risks before the transaction progresses. It is essential to ensure that both parties obtain adequate disclosures and indemnifications, make thorough and accurate representation and certifications, and receive all necessary approvals from the government so that the proposed acquisition is successful and profitable.

This article is not intended to constitute legal advice and is intended for informational purposes only.

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Joe Whitcomb

Founder and President

Joe Whitcomb is the founder and president of Whitcomb Selinsky, PC. In addition, he manages the firm and heads up the Government Procurement and International Business Transactions practice areas.

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Tim Turner

Senior Attorney

Tim Turner is a member of Whitcomb Selinksy, PC’s Labor and Employment group. He centers his practice in the Health and Safety sector, defending clients against MSHA and OSHA regulatory enforcement actions.

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