MERGER AND ACQUISITIONS
Mergers and acquisitions (M&A) are defined as consolidation of companies. Differentiating the two terms, Mergers is the combination of two companies to form one, whileAcquisitions is one company taken over by the other. M&A is one of the major aspects of corporate finance world.
Mergers and acquisitions are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities.
Mergers and acquisitions (M&A) is a general term that refers to the consolidation of companies or assets through various types of financial transactions. M&A can include a number of different transactions, such as mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions.
From a legal point of view, a merger is a legal consolidation of two entities into one entity, whereas an acquisition occurs when one entity takes ownership of another entity’s stock, equity interests or assets.
It is critically important for a successful M&A process that the selling company hire outside counsel that specializes in mergers and acquisitions. The outside legal team should include not only seasoned M&A attorneys but also experts in appropriate specialty areas (such as tax, compensation and benefits, employee matters, real estate, intellectual property, cybersecurity, data privacy, antitrust, and international trade). M&A transactions involve complex, multifaceted agreements and deal structures as well as challenging legal issues. They are typically fast-moving and can be contentious. To be effective, an M&A lawyer must be intimately familiar with both the business realities of M&A deals and the overall structure and inner workings of the acquisition agreement. He or she must have complete command of the applicable substantive law and must be a skilled advisor, negotiator, and draftsperson.
A significant M&A deal demands an experienced, focused outside M&A lawyer who has “been there, done that” many times. It is very difficult to be effective as a “part-time” M&A lawyer. The same holds true for the legal specialists required in M&A deals. Each specialist should be steeped in the M&A legal considerations relevant to your deal and practice their specialty full time. Although it is tempting to resist bringing on a “large” legal team out of concern that they will generate a large legal bill, experienced specialists will actually save you money by identifying significant risks early in a transaction and working to develop practical solutions. Moreover, a legal specialist M&A team that has worked together on many prior deals likely will be more efficient than a couple of attorneys who together claim to be expert in the many specialty areas that are critical to an M&A deal