USA – NEW YORK Trends and Developments Contributed by: Ejim Achi, Shaun Levor, Serena Shi and Alexander Mandel, Greenberg Traurig, LLP
of legal and policy volatility, deal documents should expressly address whether potential tariff refunds sit inside or outside the deal perimeter, who has the eco - nomic right to those refunds, who must pursue recov - ery and for how long, what efforts standard applies and whether pursuit costs can be recouped. In the current environment, these issues are not merely tech - nical drafting; they are material economic risk allo - cation. Buyers and sellers that address these issues directly are better positioned to avoid future disputes if subsequent court rulings or administrative actions create refund entitlements tied to pre-closing periods. Monetary policy uncertainty Expectations of a highly active year for M&A were supported in part by the prospect of further interest rate cuts, driven by improving inflation data and the possibility of more rate-cut-friendly leadership at the Federal Reserve. But that path is less certain if ris - ing energy prices and tariff-induced upward pressure on input costs are not contained. If inflation becomes persistent, the Federal Reserve may be compelled to hold rates steady, or worse, increase interest rates, which would constrain deal activity. Practitioners should expect the same risk-allocation tools that facilitated transactions during the last peri - od of elevated inflation and interest rate uncertainty to reappear with frequency. For example, portable credit facilities, which are designed to travel with the asset to the next owner, can facilitate good outcomes for buyers and sellers if such credit facilities contain better financing terms than might be available in the current environment. Seller notes with robust liquidity rights can enable sellers to transact at desirable valu - ations and monetise when the debt financing market improves. The creativity and willingness of M&A par - ticipants to deploy these and other solutions will, in many cases, determine whether transactions proceed or stall. Expectations of robust volume Assuming the Middle East conflict and the related energy shocks do not materially worsen or persist through the year, and assuming financing costs do not move materially higher, the orientation towards trans - acting that many buyers and sellers carried into 2026 should reassert itself. There is substantial dry powder,
a significant backlog of sponsor-owned assets and too much strategic pressure in too many sectors for the market to remain dormant for long. The most likely outcome is not uniform strength across every asset class, but a robust year for high-quality businesses, particularly where the target has defensible margins, pricing power, technological relevance or a clear path - way to operational value creation. Sponsor-to-sponsor transactions are also likely to remain an important feature of the market, particularly for assets that have already been developed within a private equity ownership model, where institutional ownership, existing lender relationships and prior diligence processes can make subsequent sponsor acquisitions more straightforward to execute. Evolving New York employment and restrictive covenant considerations New York-specific employment law developments may also prove more significant to 2026 transac - tion structuring than initially anticipated. In February 2026, New York amended the Trapped at Work Act, delaying its effective date to 19 December 2026 and clarifying aspects of its scope, while still preserving meaningful restrictions on certain “employment prom - issory notes” and similar stay-or-pay arrangements. For acquirors of New York businesses, and especially for transactions that depend on management reten - tion, sign-on awards, relocation packages or other repayment-based compensation mechanics, creative structuring approaches will be required to achieve the buyer’s objectives. New York courts also remain generally sceptical of non-compete restrictions in the employment context and will enforce them only if they are narrowly tai - lored to protect legitimate business interests, such as trade secrets or customer goodwill, are reasonable in duration and geographic scope, do not impose undue hardship on the employee and are not injurious to the public. Recent decisions continue to reinforce that frame - work, with courts frequently declining to enforce over - broad covenants or limiting enforcement to narrower non-solicitation or confidentiality obligations where a full non-compete is not justified.
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