October 5, 2017
M & A Lawyers: Legal Assistance with Your Asset Sale or Stock Sale
For countless businesses, across every industry and vertical, a prospective merger, acquisition or other business combination represents the culmination of long term strategy. Through the merger/acquisition process, an entity can obtain a huge influx of capital, merge with an existing business of greater size in order to improve the scope, reach and assets available to the targeted entity and deliver a big pay day for the founders and stockholders of the entities involved. However, these transactions are extremely complex, involving numerous documents, moving parts and variables. Even seemingly minor details can have significant consequences in terms of determining future governance of the surviving entity(ies), allocating risk, shielding entities and individuals from liability and maximizing economic gains.
Given the sheer magnitude of these types of deals, and the impact that they have on the existence and viability of the entities involved, it is extremely important to retain attorneys who have experience in guiding clients through the various stages of business combinations.
What Can Mergers and Acquisitions Attorneys Do for Me?
The merger, acquisition and business combination process should involve close consultation with legal counsel at the outset, beginning with a careful consideration of which transaction method to utilize. For example, an asset sale/purchase as opposed to a stock sale/purchase will lead to different outcomes in terms of assumption of liability and debt obligations, continued corporate existence for the target entity, retention of cash by the selling entity and numerous tax-related issues.
After settling on the structure for the subject merger/acquisition transaction, the next stage of the process should include the drafting of a letter of intent by qualified legal counsel. The letter of intent document is particularly important because it establishes many of the key terms of the underlying deal at the outset, and charts the course for the eventual governing documents that will formally memorialize the transaction. Getting it right in the letter of intent is crucial because parties to these types of transactions will usually resist any attempt to renegotiate key deal terms at later stages in the process.
Following a fully executed letter of intent, the most important deal documents must be drafted, negotiated and finalized. The purchase agreement (either an asset purchase agreement or stock purchase agreement, as applicable) is the most significant document in terms of fleshing out the deal points and establishing the many facets of the transaction. Finalizing this agreement often takes several weeks, and can lead to several rounds of sometimes contentious negotiations.
Mergers and Acquisitions Lawyers Make Sure You Come Out on Top
Mergers, acquisitions and other business combinations are often the most important transactions undertaken by business owners, and the process can determine so many matters vital to any given business’s longevity and profitability. For those reasons, together with the rationale set forth above, it is essential to retain an experienced, skilled mergers and acquisitions lawyer to help guide your business through what is almost always a lengthy and complex undertaking.
Please note that this is only a brief overview of some of the legal issues surrounding mergers, acquisitions and other business combinations. As such, it is important to remember to obtain guidance from an experienced mergers and acquisitions lawyer prior to consideration of such transactions.
If you are interested in learning more about this topic or require assistance in connection with a merger or acquisition, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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