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Merger and Acquisition Solicitors
Merger and acquisition corporate transactions are commonly also referred to as M & A. There can be a tendency to think of a merger or acquisition as somehow terms that only apply to listed companies or that the definition and use of the terminology means there is something different about M & A from small company or business sales or purchases. The short answer is that there really isn’t anything inherently different.
If you need lawyers for a merger or acquisition and are looking for a firm which has deep experience and knowledge of the issues and pitfalls, but are more affordable than the large corporate only law firms, we are an ideal choice.
Issues with business mergers
With a merger, there is often intention is to largely integrate the 2 businesses. Mergers can be based on 2 complimentary businesses which do different things in the same industry or 2 businesses in effectively the same business space where a merger can create a bigger brand with more resources and economies of scale and/or cost savings.
One of the immediate challenges in merger negotiations is where the 2 businesses are on the face of it of similar size. In reality, 1 of the businesses will usually be stronger.
With merging businesses can often be a very difficult balance between appreciating that there will be potentially many staff who have been essential to each business and that, in the short to medium term, these staff will be vital against the fact there will be similar job positions or roles where there will only be a single role post merger.
Corporate Acquisitions – strategic and legal issues
What perhaps separates an acquisition is some sense from a more standard business purchase transaction is that sometimes there are tactical and stealth issues associated with an acquisition. In this contact the business to be bought is sometimes targeted rather than the situation where the owners of a business are actively looking to sell and seeking a buyer.
So, where a business is targeted for purchase it can be key to get the approach right and to ascertain the position with shareholders and for example, whether there are drag along provisions whereby the majority shareholders can force all other shareholders to go along with the sale.
With an acquisition, it can be even more important to have detailed legal and financial due diligence before an acquisition approach. This will include, as an example, looking at IP owned by the target business, public filings and very discreet market enquiries.
Key issues in M & A transactions
- Considering the structure of the deal
- Cash or equity?
- Escrow and/or earn out for the purchase price.
- Timing issues