New York City Mergers And Acquisitions Lawyer
Business owners in New York City are often interested in divesting critical assets or building strategic alliances as part of growth and expansion. Nonetheless, today’s business environment is more complex, more fast-paced, and more competitive than ever. From a legal point of view, it’s never been more necessary to get structuring, due diligence, financing, contracts, and compliance right from start to finish. Timing is also critical here.
Fridman Law Firm represents acquiring companies and target companies in New York City, applying a methodical, comprehensive approach to ensure successful transactions. While mergers and acquisitions (M&A) are exciting new ventures, our experienced M&A lawyers understand how these transactions may impact a company’s future and even expose founders and investors to legal risks and liabilities. Our New York City mergers and acquisitions lawyers will mitigate these risks as we protect your interests in the purchase or sale of your business.
What Are Mergers and Acquisitions?
When it comes to matters of sustainable growth and consolidation, mergers and acquisitions have long been the go-to strategies. M&As involve the process of combining two or more companies into one. The objective of consolidating companies or assets is to achieve synergy. In simple terms, the outcome of the whole (new) company should be greater than the sum of the separate entities.
Although these nuances are often used interchangeably, they have distinct differences.
Types of Acquisitions in New York
In an acquisition, an acquiring company — a larger company — purchases another company’s ownership stakes, with both remaining separate entities. Generally, for an acquisition to happen, one company buys a majority stake (over 51% of shares) in the other company. Such deals may either be friendly or hostile, depending on the position of the target company’s board.
During these transactions, the acquirer may assume the target firm’s liabilities and receive its assets. Here are the two main types of acquisitions:
A company purchases the shares of another company during an acquisition. The acquirer pays the target company’s shareholders in exchange for shares of the target firm. Typically, shareholders receive compensation during the takeover, not the target. Some considerations to keep in mind during a stock purchase include:
- Shareholders bear tax liabilities since they receive direct compensation.
- The acquiring company absorbs all of the target’s assets and liabilities, even those not on the balance sheet.
- Shareholders must approve the acquisition through a majority vote to receive compensation.
In this type of acquisition, the acquirer purchases the assets of the target company, paying them directly. Specific considerations are important during asset purchases, including:
- Compensation received is taxed as capital gains at the corporate level.
- Acquirer doesn’t assume the target’s liabilities since they only purchase assets.
- Generally, shareholder approval isn’t required unless assets are significant — more than 50%.
Mergers in New York
In mergers, the boards of directors of both companies mutually agree to become partners and seek shareholders’ approval. This can happen between firms of any size, not just large corporations. In a merger, a new single business entity assumes all the assets and liabilities of the merging businesses. This allows the two former entities to access new markets, products, or services.
By merging with or acquiring firms, companies can attain economies of scale, overcome competition, acquire monopolies, improve operations and distribution capabilities, procure new talent, and increase revenues.
Issues Involved in Mergers and Acquisitions
When entering into a merger or acquisition deal, it’s advisable to have an experienced New York City M&A lawyer oversee the transaction. A lawyer can offer valuable insights you may miss that could lead to legal disputes. They can provide tailored plans based on your firm’s needs and goals.
One of the main issues in M&A transactions is inadequate due diligence. When it comes to acquiring or selling businesses, efficiency means efficiency, not cutting corners. To do so, you must conduct thorough due diligence to discover crucial facts about:
- Insurance coverage
- Liabilities, such as debts
- Distribution agreements
- Employment contracts
- Financial stability
- Tax information
- Government and regulatory issues, including audits by enforcement agencies
- Compensation agreements
Such details allow parties to adjust their expectations, guide negotiations, and reduce the risks of financial and legal problems. With thorough due diligence, parties can avoid potentially catastrophic business deals. An experienced New York City mergers and acquisitions lawyer can guide you during this process, ensuring all boxes are checked to prevent future problems.
Other issues involved in M&A transactions include:
- Overestimating possible synergies
- Targeting the wrong company
- Overpaying for the target company
- Integration challenges
- Staff retention
- Unexpected problems related to communication or security
At Fridman Law Firm, our business lawyers assist clients in various M&A services, including:
- Identifying legal issues and opportunities related to the industry and the type of transactions under consideration.
- Obtaining approvals from lenders and contractual parties.
- Handling employment issues, including complying with ERISA requirements
- Negotiating the term sheet.
- Transferring titles to real estate, assets, and equipment, including performing title searches.
- Dealing with intellectual property transfers.
- Handling regulatory filings with federal agencies such as the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and the Federal Trade Commission (FTC).
Mergers and acquisitions involve different transactions, as well as contractual, legal, and market issues. Some of these issues may also be industry-specific. An experienced lawyer can offer valuable advice and insights into the sale of assets or stocks, buyouts, partnership dissolution, tender offers, consolidation, corporate restructuring, strategic planning, and acquisition of assets.
At Fridman Law Firm, our legal team will diligently and efficiently handle these transactions for you, leaving no stone unturned to ensure you get a deal that meets your needs and guarantees the growth and success of your business.
Experienced NYC Mergers and Acquisitions Lawyers Representing Both Buyers and Sellers
Considering M&A transactions in New York? Consult with our trustworthy advisors to get the most out of your deal. Fridman Law Firm’s New York City mergers and acquisitions lawyers are prepared to handle every aspect of your merger or acquisition transaction. We possess many years of experience counseling and representing clients in the boroughs of New York in transactions of all sizes.
Our legal team understands that every transaction is unique and important to the parties involved. Fridman Law Firm is committed to providing solution-oriented legal counsel to our clients. Call 212-262-9823 today to schedule a consultation with one of our NYC M&A attorneys. You can also visit our New York business law office to learn about our M&A services. Let us help you get the most out of your deal.