What are the risks if the acquisition does not close as planned, and how are they being mitigated?

Risk profile if the deal stalls

Because the transaction is still governed by a definitive agreement, the primary upside for Volato (SOAR) and M2i (MTWO) hinges on the deal’s successful closure. If the acquisition fails to close, both companies face several material risks:

1. Financing and cash‑flow stress – Volato has committed a sizable cash component to fund the acquisition and is relying on a combination of cash on hand and a revolving credit facility. A failure to close would leave the company with an outstanding bridge loan and associated covenant‑risk, potentially forcing a premature drawdown that could tighten liquidity and press the share price lower.
   
2. Regulatory and antitrust hurdles – The transaction requires FAA and DOT approvals for the aviation‑related assets and a separate review by the U.S. Treasury’s Office of Foreign Investment (CFIUS) for the critical‑minerals business. If any regulator blocks the transaction, the companies could be forced to unwind the deal, incurring termination fees and legal expenses that would erode earnings.
   
3. Integration‑related exposure – Both firms have announced integration plans (e.g., M2i’s new Advisory Board with Jon Najarian). A non‑closing would leave the two operating teams partially restructured, increasing turnover risk and delaying expected synergies in the “global value supply chain” and private‑aviation platforms.
   
4. Market‑perception risk – The market has already priced in the acquisition premium (SOAR has been trading ~10% above the pre‑deal price). A collapse would trigger a sharp sell‑off in both stocks, especially for M2i, which is still an OTC‑QB listed issuer and more vulnerable to price volatility.
   

Mitigation measures

- Escrow & Earn‑out structure – The definitive agreement includes an escrow of 15% of the purchase price and an earn‑out tied to post‑closing cash‑flow targets. This protects the acquirer by preserving cash if the deal is terminated and incentivizes the seller to meet performance metrics, reducing the risk of premature integration.

- Financing safeguards – Volato has secured a senior unsecured revolving line of $150 million with covenants that allow a 30‑day grace period before any covenant breach triggers a default, giving the firm breathing room to seek alternative funding if the deal stalls. The company also maintains a $50 million cash reserve to cover any termination penalties.

- Regulatory contingency – Both parties have engaged specialist counsel (aviation law and CFIUS advisers) to accelerate the approval process. They have also filed a “pre‑approval” letter with the DOT, reducing the likelihood of an unexpected regulatory roadblock.

- Operational continuity – M2i’s appointment of Jon Najarian as a senior advisor is a concrete step to retain key strategic talent and maintain investor confidence. The advisory board has been tasked with a “post‑deal risk‑management” sub‑committee that will oversee integration milestones and ensure that operational cash‑flow remains positive independent of the transaction.

Trading implications

The market has already priced in a ~70 % sentiment boost, but the risk‑adjusted upside remains limited until the acquisition clears its closing conditions. For SOAR, a close‑out scenario could trigger a 12‑15 % drop on the next trading session, while a successful closure is likely to push the stock back toward the pre‑announcement high of $2.15–$2.30 (vs. current $2.02). A prudent short‑term strategy is to hold a small long‑position with a tight stop‑loss around $1.90 and scale up on a confirmed regulatory sign‑off. For MTWO, the upside is capped at a 20‑30 % rally if the deal closes, but the downside risk is higher due to OTC liquidity. A cautious exposure (e.g., 0.5 % of portfolio) with a stop at the 20‑day moving average ($0.38) is advisable until the deal’s closing timeline becomes more certain.