An Overview on Mergers and Acquisitions Law
Things to consider when beginning your merger or acquisition
on December 15, 2016
Updated on March 30, 2020
Deciding to merge with, or purchase, another company is a big step for any business. This process will require a lot of research and investigation on your part, and you will also want to engage in negotiations, so that the transition goes as smoothly as possible.
The following overview will give you a look at basic things you should consider when beginning your merger or acquisition. While it may be possible to accomplish some of this due diligence on your own, it will be beneficial to have a lawyer assist you with the process.
Mergers and acquisitions are areas of corporate law that involve companies purchasing—or merging with—other companies. When two companies merge, they form one new company and the original companies cease to exist. Acquisitions happen when one larger company takes over another smaller company. While a new company is not formed in an acquisition, the smaller company ceases to exist, and its assets become part of the larger company.
When you are seeking to merge with or acquire another company, you and your lawyer will want to make special efforts to gather as much information as possible about the other company, to check if there are problems you should be aware of. Some things you should consider looking into include:
Do you and the other company both have a strategic purpose for going through with a merger or acquisition? Successful transactions will add benefit to your company instead of just creating overlap with what your company already does. For example: Your company and the other might do similar work but in different regions or territories, and merging will offer more territory to both businesses. This may be preferable to combining with a company that operates in your same area.
You will want to make sure you are aware of the other company’s patents and intellectual property, as well as the steps they have taken to protect their intellectual property and trade secrets. This will help you ensure that you are not merging with or acquiring a company that has potential patent infringement problems.
Make sure you understand the other business’ client base. Who are their biggest clients, and will there be any problem with client retention after the merger or acquisition? If you foresee potential problems, you may want to work out a retention plan before the combination, in order to prevent client loss instead of trying to make up for it later.
When you merge with or acquire another company, you will take on their assets, but you will also take on their legal obligations. Be sure to understand pending litigation against the other company, what pending suits from outside parties or employees exist and the terms of any settlements the other company has entered. You may also want to investigate judgments and liens against the company or its property, and you may want to speak with a lawyer to understand how those things will affect you after the combination.
Finally, you may want to consider what property the other company has. What leases or deeds does the company have to pay? Will you keep them after the combination? If there are multiple office buildings, you may want to consider whether you will keep employees in separate building or whether you want to have all your workforce in one place.
Below are some common questions you might want to consider when meeting with an attorney for the first time.
- Do mergers and acquisitions require shareholder approval?
- What happens to shares in a merger?
- How do you make sure your business is strong after a merger?
- Do mergers increase stock value?
- What are the benefits of mergers and acquisitions?
Finding the Right Attorney for Your Needs
It is important to approach the right type of attorney—someone who can help you through your entire case. To do so, you can visit the Super Lawyers directory, and use the search box to find a lawyer based on your legal issue or location.
To help you get started, you may want to consider looking for a lawyer who practices mergers and acquisitions law.
Why Should I Talk to a Lawyer?
Mergers and acquisitions are delicate transactions and require careful planning and attention to detail. They also involve a fair amount of research and investigation into the company you are combining with. A lawyer can help you obtain business records and copies of past litigation and settlement agreements, so you can make an informed decision.
A lawyer will further be able to anticipate potential problems with your merger or acquisition and advise you on how to approach them, as well as keep track of deadlines and file all the paperwork with the necessary courts and agencies—giving you one less thing to worry about.
Why Super Lawyers?
Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. As Super Lawyers is intended to be used as an aid in selecting a lawyer, we limit the lawyer ratings to those who can be hired and retained by the public. You can learn more about the selection process here.