Business owners and corporations enter into merger or acquisition agreements for many reasons. In some instances, they seek to expand their current business operations by buying out or merging with their competitors. In other cases, business owners may want to sell their company so they can retire or start a new venture. Whether you are looking to grow your business or sell your company, you should consult with a Georgia mergers and acquisitions lawyer.
Our team at Sparks Law will help you structure the deal and prepare the legal documents necessary to complete the transaction. Get in touch with a Georgia business law attorney who can help you devise a plan to achieve your goals.
Although people frequently use the terms synonymously, mergers and acquisitions are distinct legal concepts.
Mergers are transactions through which two or more businesses unite to form a single, new business entity. If you own a business, you might choose to merge with another company to increase market share, decrease operating expenses, expand into new markets, grow revenues, or generate larger profits.
Acquisitions are transactions through which one business purchases all of the stock or assets of another. Instead of forming a new entity, the purchased company becomes part of the acquiring business and typically cedes all decision-making power to that owner.
Depending on your specific business objectives, you may wish to pursue one of these consolidation methods over the other. A dedicated lawyer can help you understand the key differences between mergers and acquisitions and advise you on which one to pursue.
In addition to determining which consolidation method to use, businesses need to determine how they will structure the deal. During the process of structuring a merger or acquisition, businesses must determine how they will compensate owners or shareholders for relinquishing equity in the companies.
Businesses may either pay owners or shareholders cash for their interest in the old company or give them stock in the merged or acquiring company. Both forms of consideration provide their own benefits and drawbacks.
If owners or shareholders receive cash in the transaction, they will likely realize monetary gains more quickly than if they received stock. However, the money received will likely be treated as taxable income, increasing owners’ or shareholders’ tax liabilities for that tax year.
Conversely, if owners or shareholders receive stock, they will likely realize monetary gains more slowly than if they received cash, but the transaction will not likely create any personal tax liabilities. If you need help deciding how to structure your merger or acquisition, talk to a skilled attorney.
To complete a merger or acquisition, Georgia law requires businesses to prepare and execute certain legal documents. According to the Official Code of Georgia Annotated § 14-2-1105, the merged company or the acquiring business must file either articles of merger or share exchange or certificates of merger or share exchange with Georgia’s Secretary of State.
If the companies do not prepare and file these documents, the merger or stock acquisition will not be deemed final under state law. A diligent lawyer could help you finalize your merger or acquisition transaction by drafting and filing the appropriate legal documents on your business’ behalf.
If you want to acquire a business, sell your company, or merge with another business, you should contact a Georgia mergers and acquisitions lawyer.
Sparks Law can provide you with guidance while structuring and negotiating the transaction. An attorney can draft and file the legal documents needed to complete your transaction. Call today to learn how we can support you throughout your business deal.