You may be considering growing your business by acquiring a compatible one. For instance, if you are a manufacturer, you may decide to acquire the company that distributes your product. On the other hand, you may be ready to combine into a larger company that will infuse yours with additional capital.
Whatever your goals, business combinations are carefully orchestrated events that should be handled by a skilled attorney. To learn more about your options for growth, contact a Connecticut mergers and acquisitions (M&A) lawyer at Sparks Law to begin planning your strategy.
Horizontal mergers transpire when two competitor companies come together. Vertical mergers entail a company and one of its customers or suppliers coming together. Conglomerates involve several unrelated companies operating under a parent company. For example, Berkshire Hathaway Inc., known chiefly for providing financial services, also owns retail, transportation, and utility subsidiaries. A local attorney can discuss which type of merger or acquisition is beneficial for the specific situation.
Once a client expresses interest in the M&A process, an experienced Connecticut lawyer could introduce suitable targets after discussing their goals. The attorney will explain how efficiency and profits can rise by combining some functions. There may be tax benefits to a business combination, too.
Other services an M&A attorney can offer include:
A diligent mergers and acquisitions lawyer plays an integral part in any business combination and can ensure all parties adhere to Connecticut’s corporation statutes.
Acquisitions occur either through stock or asset purchases. A knowledgeable M&A lawyer at our Connecticut office could further explain these two ways of acquiring a corporation.
Stock purchases involve the shareholders of the company, as they are the owners and must vote to approve the transaction. Shareholders are paid either an amount of money per share, stock in the acquiring company, or a combination of the two. The acquiring company ends up with the assets and liabilities of the company.
When an acquirer purchases only a target’s assets, the company is paid rather than the shareholders. The shareholders generally vote on the transaction if the transferred assets are more than 50 percent of the target company’s value.
In any marketplace, buyers and sellers appreciate a favorable price for their transactions, and mergers and acquisitions are no exception. One crucial step is to agree on what the target company is worth. Attorneys and accountants do this by comparing similar companies’ transactions, including publicly traded companies. The discounted cash flow method based on future cash flows of the target is also standard.
The form a company takes after merging or acquiring another company influences how the company goes forward. A large company acquiring a smaller one in a stock purchase can run the smaller entity as a subsidiary or absorb it.
The companies could also become a new company with a new name. Mergers and acquisitions are complicated legal strategies, and an experienced attorney should be involved from the moment a Connecticut business wishes to explore possibilities.
Enterprising businesses know that acquiring or merging into a suitable company can mean streamlined operations, growth in revenue, and even an exit strategy for longtime owners ready to retire.
If you have been thinking about buying or selling your business to expand your presence, infuse it with capital, or wind down your role, contact Sparks Law today. Schedule a consultation with a Connecticut mergers and acquisitions lawyer to learn more about your options.