Your company may have grown to the point where you are considering acquiring other businesses that complement your long-term goals. Alternatively, you may be considering an infusion of capital or a stock exchange to become part of something bigger.
If you are wondering whether a business combination is right for your company, speak with a knowledgeable attorney at Sparks Law. A Johns Creek mergers and acquisitions lawyer could walk you through the process that starts with a desire to explore a deal.
When management from two legal entities begins talking about consolidating their operations, assets, and liabilities, they are talking about mergers and acquisitions (M&As).
When two corporations enter into a merger, shareholders in both companies end up owning shares in the combined company. Mergers are meant to gain a stronger marketplace position when the companies are combined. For example, a clothing company could merge with a production company. The new company would now design, produce, and distribute clothing.
Acquisitions can be mutual agreements or hostile takeovers in which the acquirer buys up the takeover candidate’s stock, either in private transactions or on a public exchange, until the acquirer owns a majority interest. Acquisitions can benefit cash-strapped companies because they may operate as subsidiaries after receiving an influx of capital from the parent company in the acquisition.
A Johns Creek attorney familiar with business combinations should be involved in a client’s merger or acquisition.
When a company is seeking to acquire or merge with a suitable candidate, the parties sit down to discuss how the combined company would benefit those involved and how much it might cost both parties to reap this benefit. The parties should have their own legal representation, which a skilled local M&A attorney could provide.
The first document involved in a merger or acquisition will likely be a Letter of Intent (LOI), which binds the parties to a definitive time to hammer out terms and perform due diligence. The parties are not bound to go through with the deal if one side is not satisfied. The LOI also defines confidentiality between the parties and will forbid the parties from entertaining other candidates while the LOI is valid. A seasoned M&A lawyer should draft the LOI to make sure it covers essential elements.
Following the LOI, the parties engage in due diligence. Management and advisers comb over the other company’s books and records to make sure both parties understand every aspect of the other business. The company lawyer, accountants, and management should conduct due diligence together.
The closing documents are dominated by the definitive agreement that will be a merger, share purchase, or asset purchase. Some of the elements of these agreements include:
An attorney at our Johns Creek office should help draft all merger or acquisition contracts to avoid costly mistakes.
Many details affect how contracts for business combinations are drafted, which should be left in the competent hands of an experienced attorney. Your goals, your entity status, and whether you are the acquirer or the target all matter.
A Johns Creek mergers and acquisitions lawyer at Sparks Law could sit down with you before offering a candidate a Letter of Intent to make sure you are represented during each step of this complicated process. Call today to schedule your initial consultation.