When Corporate Misconduct Freezes A Deal: How Deferred Prosecution Agreements Keep M&A And Restructurings Moving

Corporate misconduct, such as bribery, fraud, tax violations, environmental breaches, or other regulatory offences, can freeze a mergers and acquisitions (M&A) process or a restructuring negotiation almost overnight.

Once allegations surface, uncertainty quickly becomes commercial: investors pause, lenders reassess risk, counterparties delay decisions, and transactions lose momentum. As time drags on, operations are disrupted, liquidity tightens, and enterprise value erodes – often weakening recoveries and limiting strategic options.

This is where a deferred prosecution agreement (DPA) becomes commercially relevant. A DPA is a structured resolution framework in which prosecutors defer pursuing charges against a company, provided the company fulfils agreed obligations over a defined period. These obligations typically include remediation measures, compliance improvements, cooperation, and financial penalties. If the company meets the terms, prosecution is generally dropped at the end of the term; if it fails, charges can proceed.

In practical terms, a DPA turns uncertainty into a defined roadmap with clear commitments, milestones, timelines, and monitoring. That shift can restore confidence and allow transactions or recovery plans to continue with appropriate safeguards.

A frequently cited illustration of "deal relevance" is Zimmer's acquisition of Biomet, where the target had an existing DPA related to bribery. Rather than leaving the exposure as an unbounded risk, the DPA helped make the compliance obligations and remediation pathway more concrete – something the buyer could assess, price, and manage through deal protections (e.g. escrow/holdbacks, conditions, and post-closing governance and compliance commitments). The DPA does not remove the risk, but it can make the risk executable within transaction terms.

The same logic applies in restructuring. Creditor support and recovery outcomes depend heavily on predictability and execution. When misconduct allegations create a "wait and see" standstill, a time-bound, monitored framework can help preserve value by enabling stakeholders to move forward while remediation runs in parallel.

Globally, DPAs are used to manage corporate misconduct in a time-bound and monitored way. In Indonesia, a formal DPA pathway became available under the new Criminal Procedure Code (KUHAP) effective January 2026. The key takeaway is not that DPAs replace civil restructuring or solve every legal issue, but that they can function as risk-containment mechanisms – helping preserve enterprise value and keep M&A and restructuring processes executable when misconduct would otherwise bring them to a standstill.

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