Mergers And Acquisitions Lawyer
Mergers and acquisitions are complex business transactions that can translate into significant milestones in a company’s growth and success. Nonetheless, these business transactions require meticulous planning, strategy, and execution. Mergers and acquisitions (M&A) typically occur in competitive economic landscapes wehre businesses thrive. However, these business transactions can be risky and costly without proper legal representation from a mergers and acquisitions lawyer.
Proper legal guidance is crucial to the success of these transactions. At Fridman Law Firm, our experienced dealmakers bring years of experience guiding parties through mergers, acquisitions, and strategic restructuring. Our experience in these transactions can help you and your business navigate the complex landscape of mergers and acquisitions law. With uncompromising attention to detail, an in-depth understanding of business transitions, and creative legal solutions, our mergers and acquisitions lawyers will ensure you are positioned for success.
Whatever the size or industry, Fridman Law Firm works with clients to acquire, sell, or consolidate businesses. Our mergers and acquisitions team will work closely with you every step of the way, from complex negotiations to financing, strategic evaluation, closing, integration, and ongoing corporate governance, ensuring you get personal attention and top-notch representation.
What Are Mergers and Acquisitions?
The term mergers and acquisitions can be defined as the fusion of two or more companies to create a new, joint organization. Although the terms “mergers” and “acquisitions” are used interchangeably, they share totally different legal meanings.
In a merger, two or more firms combine to create a new legal entity that uses one corporate name. An acquisition, on the other hand, happens when a company purchases and absorbs another company. These transactions are often done to:
- Reduce competition
- Increase market share
- Maximize profits
- Optimize productivity
- Gain access to new products or technology
- Expand operations
During these transactions, valuation plays a significant role and is a central point of discussion between the buyer and seller.
How Are Merger and Acquisition Transactions Valued?
While small transactions involving the sale of startups or small businesses may rely on business appraisers for valuation, larger ones may also depend on industry knowledge, negotiation tactics, and information uncovered during due diligence. Critical factors that may be considered during valuation include:
- Industry trends
- Intellectual property owned
- Past and projected performance
- Company operations
- Comparable deals within the market
- Number and type of bidders
- Business risks
What Agencies Regulate Mergers and Acquisitions?
Various federal and state agencies may regulate mergers and acquisitions. The Antitrust Division of the Department of Justice and the Federal Trade Commission (FTC) review transactions for compliance with antitrust and competition laws. On the other hand, the Securities and Exchange Commission (SEC) regulates the sale and transfer of securities to protect investors.
Mergers and acquisitions must also comply with state laws governing companies, board and shareholder approvals, fiduciary duties, takeovers, and other requirements. Typically, the state laws where the business is incorporated, be it Delaware, New York, California, or any other state, apply during mergers and acquisitions.
Types of Mergers and Acquisitions
Mergers and acquisitions are different ways of structuring the purchase and sale of businesses. The choice to opt for one over the other usually depends on the circumstances and goals of the buyer and seller.
Types of Mergers
Mergers are less common than acquisitions due to the complexities of consolidating two or more business interests. This business transaction involves negotiations between the seller’s and buyer’s management and boards. Shareholder approval may also be required once the management and board recommend a merger.
Mergers can be structured in different ways, including:
- Horizontal merger. Two or more companies in the same type of business that are in direct competition.
- Vertical merger. Two companies in the same industry but in different production stages. For example, an ice cream maker and a cone supplier.
- Congeneric mergers. Two companies serving the same customers but with different kinds of products. For example, a cable company and a TV manufacturer.
- Market-extension merger. Two businesses selling the same products but to different market segments.
- Product-extension merger. Two businesses selling different but related products within the same market.
- Conglomeration. Two companies merging even though they sell different products and have no common business areas.
Two financing methods — purchase mergers and consolidation mergers — may also be used to distinguish mergers.
Types of Acquisitions
In an acquisition, one company buys another company, assuming the latter’s liabilities as they acquire the company’s assets. Such a business transaction can be structured in two ways:
- Asset Purchase. A company may purchase another company’s assets to gain complete control and ownership of the company. These assets may include vehicles, equipment, intellectual property, land, leases, machinery, and inventory. Assuming the liabilities of the target company is another form of acquisition.
- Stock Purchase. In this type of transaction, a company may purchase another company’s shares of stock rather than business assets. If you are buying publicly traded stock, you must submit a tender offer which is a public takeover bid soliciting shareholders to sell their stock.
What Does a Merger and Acquisition Attorney Do?
Many mergers and acquisitions fall short of improving the bottom line of the companies involved. But with an experienced mergers and acquisitions lawyer, you can get a favorable outcome during the sale or purchase of a company. Solid legal representation helps you avoid future legal pitfalls due to the business transaction.
Here are some of the services to expect when you hire a merger and acquisition attorney:
- Strategizing and structuring the transaction
- Preparing a business for sale
- Drafting term sheets
- Reviewing term sheets
- Establishing a baseline acquisition structure
- Preparing seller for transition
- Overseeing due diligence
- Post-closing integration
- Clarifying tax implications
- Negotiating letters of intent
- Documenting the transactions
Other issues that you can expect your attorney to handle in merger or acquisition include:
- Identifying all legal issues related to the industry and the particular transactions under consideration
- Obtaining approvals and releases from lenders and contractual partners
- Transferring titles for real estate, assets, and equipment
- Outlining a client’s business goals and benchmarks
- Employment issues and complying with ERISA requirements
- Intellectual property transfers
Buying or selling a business can be an exciting and stressful experience at the same time. Whether this is your first time or you frequently deal with such transactions, our business lawyers can help you develop successful business plans and strategies, ensuring your interests are protected during the merger or acquisition process.
Fridman Law Firm continues to provide private and confidential legal services and general counsel for sellers and buyers as they embark on their new paths.
Comprehensive Counsel to Business Owners Seeking Successful Mergers and Acquisitions
By consolidating or merging, businesses can fully integrate their functions, goals, programs, and membership. Occasionally, two entities will want to join forces and expand their outreach to the market they serve. Mergers happen when an organization dissolves, and another takes complete control of the former’s assets and liabilities. Consolidations happen when both entities dissolve to create a brand new entity. The decision to consolidate or merge is often based on economic, legal, or tax concerns.
The law imposes strict fiduciary responsibilities on an entity’s governing body to ensure it serves the company’s best interests. Board directors, management, and officers may be liable if they don’t act prudently and diligently. It is important to note that when merging companies are tax-exempt, the newly formed entity will typically have to apply for federal tax exemption from the Internal Revenue Service (IRS).
Mergers and acquisitions are complex processes that require a merger or acquisition plan to be presented to each entity and its members. Still, antitrust laws prohibit consolidations or mergers that may weaken competition in any industry, including nonprofit organizations. For this reason, you should have a reputable merger and acquisition firm, like Fridman Law Firm, review and advise on the impact and ramifications of a proposed merger or acquisition.
Contact a Business Lawyer for Mergers and Acquisitions Today
At Fridman Law Firm, we can holistically address all aspects of a merger or acquisition deal. When you work with our seasoned mergers and acquisitions attorneys, our legal team will guide you on mitigating legal risks, ensuring compliance with federal and state laws, and negotiating favorable terms. Choosing the right attorney is critical to the success of your deal and can provide considerable long-term benefits for your business.
Whether you are buying or selling, you want the legal representation of a law firm that specializes in mergers and acquisitions and offers top-notch due diligence, regulatory documentation, legal and financial structuring, and contract negotiations.