Secured Transactions

Mergers

When two or more independent businesses come together to form one, it is called a merger. Conglomerate, horizontal, vertical, product expansion, and market extension are the five most typical merger types.

A merger of equals occurs when two or more businesses consolidate without a specific acquiring firm. Instead, the new board will have representation from the combined company that is equal to or nearly equal. Shareholders of each company give up their shares in exchange for new company shares. True mergers of equals are rather uncommon.The companies will typically refer to an acquisition as a merger rather than an acquisition out of respect for management and employees or as a marketing strategy.

Acquisitions

An acquisition is when another company buys the target company (the acquirer). Acquisitions can take place through the purchase of the target company’s stock or other equity interests as well as the acquisition of all or a sizable portion of its assets.

Stock acquisitions. Shares of the target company are purchased by the acquirer from its stockholders. As a result, both the target company’s assets and liabilities are acquired by the acquiring party.The number of shareholders in the target firm is one of many variables that affect how complicated a stock acquisition is legally.

Asset acquisitions.The acquirer purchases all or a portion of the target company’s assets. Equipment, vehicles, stock, inventory, and facilities are some examples of assets. The acquirer has the flexibility to decide which assets—and liabilities—to absorb, and is not required to buy all of the target company’s assets. This is typically regarded as one of the benefits of purchasing assets as opposed to stocks. You can learn more about the benefits and drawbacks of purchasing stock as opposed to assets with the aid of a knowledgeable mergers and acquisitions attorney.

Due Diligence

Both the selling and the acquiring company must perform due diligence during a merger or acquisition. This requires sellers to take the appropriate actions to optimize the value of the business and complete the transaction. The Seller shall provide complete and accurate paperwork to satisfy such objectives. After that, the document must be examined and analyzed by the acquiring business to determine whether it supports closing the acquisition and to spot any dangers or red flags. The seller is frequently required to disclose all corporate governance documentation, financial liabilities, capitalization schedules, tax data, operating data, customer and vendor information, employee and labor relations information, payroll and benefits information, real estate, intellectual property, research and development, contractual rights and obligations, and any other unique industry considerations. You can get support with this phase from a due diligence attorney.

Corporate Governance

Corporate governance is one of the crucial aspects of due diligence. In order to comply with this, the seller must disclose all of its governing documents, including its articles of incorporation, bylaws, board meeting minutes, shareholder materials, locations where it conducts business, any prior agreements, changes in control and corporate reorganizations, stock transfer ledger, organizational charts, policy manuals and corporate codes of conduct, press releases, and bank accounts. Once more, prompt and thorough disclosure by the seller will aid in closing the acquisition and allay any concerns the acquirer may have about unforeseen issues.

Antitrust

Governmental organizations examine proposed deals that have an impact on American commerce and are larger than a specific threshold to avoid anticompetitive impacts like the formation of a monopoly. As a result, the majority of significant M&A agreements have clauses outlining the parties’ cooperation during a potential antitrust investigation. Sellers seek assurance that, regardless of how long antitrust clearance takes, the sale will close. Acquirers desire the freedom to terminate a contract if it is no longer in their best interests financially, though. Even before the agreement is subject to antitrust examination, a mergers and acquisitions attorney can assist in negotiating a mutually acceptable antitrust-related condition.

Taxation

Significant tax ramifications for all parties involved are frequently associated with large corporate transactions like mergers and acquisitions. As a result, tax experts should be heavily involved in the transaction’s structuring to allow the corporations to benefit from tax-preferred structures and prevent needless tax burdens.

Pricing

Pricing can differ significantly depending on the agreement. Hourly prices for this kind of transaction start at $225 when you employ a mergers and acquisitions lawyer in the LegaMart network, but they can go much higher depending on whether they have a particular level of experience. Get a free consultation and obtain a price quotation from one of our attorneys to get a better idea of what it will cost for your particular scenario.