Q: “What additional due diligence should we do now around a target company’s business continuity and crisis response plans? I imagine this sort of thing matters now more than ever.”

Answered by Ashik Shah

A: Business continuity and crisis management response plans help a company protect its business from a disaster (e.g., earthquake, cybersecurity breach, pandemic, etc.). Due to the effects of the COVID-19 pandemic, a Buyer should carefully analyze the effectiveness of a target company’s use of its business continuity and crisis management plans. If a target company does not currently have a business continuity plan or crisis management plan in place, then this could raise a potential red flag issue in the due diligence process. If a plan does not address particular concerns related to COVID-19 (e.g., working remotely, employee safety issues, continuing customer and supplier relationships, etc.) or specific inadequacies under the plans, then a Buyer should contemplate implementing any additional requirements under the plans.