Legal Aspect of Mergers and Acquisitions
Mergers and acquisitions (M&A) are two terms used as aspects of corporate finance, strategic management and any administration dealing with the purchasing, selling, partitioning and combining of different corporate and analogous entities that can lead to the growth of an enterprise in its location of foundation or its field without creating a secondary, other small entity or using a dual undertaking. A good Louisiana business transactions attorney can help in mergers and acquisitions. In summary, mergers and acquisition from “merge and acquire” can be defined as the process of reorganizing an entity with intent of providing positive value or growth through consolidation of resources from many small companies to form a larger/larger ones.
Legal definition of mergers and acquisitions
A legal definition of mergers is the act of joining two or more companies to form one larger entity, whereas acquisition is the act of completely taking over another company and establishing itself as the sole proprietor, leaving the company to exist as it was and as an independent legal company controlled by its new owner. More often, the word “merger of equals” is always used in scenarios where both CEOs of both companies amicably agree to join their companies for the purpose of their best interest. In cases where the whole process seems unfriendly, then the act is regarded as an “acquisition”. In harsh/unfriendly acquisitions, mergers and acquisitions attorney are the best mediators.
Deep analysis of acquisitions
Acquisition/takeover involves the act of buying (acquiring) one company or business by another business entity or company. The purchase can be of nearly 100% or exclusively 100% of the acquired asset. Once a company or business entity has been acquired, varieties of structures are used in the determining control over the assets of the company. These different structures attract different tax and regulation. For instance:
• If the buyer buy shares of the target company, all the risk and uncertainty are to be tolerated by the controller of the company who in this case is the buyer.
• If the purchaser buys the assets then the target company uses the money they receive to pay shareholders as dividends, the target company is then left without anything. The buyer may decide to pick what they are interested in and leave the rest hence evading any foreseeable liabilities.
Problems likely to occur during mergers and acquisitions
• As a result of improper documentation or sharing contained knowledge, it makes it difficult to effectively converse during the merger and acquisition process.
• Often, the management team from acquired firm always pose difficulty in terms of payments and promotions for them to render their expertise and talent.
• When the acquisition process fast, transfer of capabilities and technologies become more difficult and complicates the whole process. For swift mergers and acquisitions, mergers and acquisitions attorney step in to ensure that all parties are fully content.
Duties of mergers and acquisitions attorney
• First , mergers and acquisitions attorney prepares purchase agreement forms.
• Prepare and review non-compete agreements.
• Help the acquire in reviewing liabilities and contracts of target entity.
• Mergers and acquisitions attorney also coordinates together with other legal and non legal specialists in completing all the required process.
• Mergers and acquisitions attorney in addition drafts/review employment agreements so as to avoid conflict between the new owner and the employees of the target entity.
• In some scenarios, mergers and acquisitions attorneys help clients find prospective buyers.
• In matters pertaining finance, together with people in finance, mergers and acquisitions attorney advise the buyer on the best structure in terms of finance.
• They can also help their client secure loans from banks or prospective lawyers.
• Help clients create a form of defensive plan through navigating stockholder dimension or board issues.
More information about Lafayette law can be found at http://www.lafayettebar.org