What are Mergers and Acquisitions and what should you know about these transactions?
What is “M&A”? The term “Mergers and Acquisitions” is broad and encompasses a myriad of transactions and deal structures, including private sales to outside purchasers (e.g. new owner/operator or equity group), internal transitions to key employees or shareholders, the merger of two or more businesses, and corporate / company restructuring through combination or divestiture.
But at its heart, a Mergers and Acquisitions transaction means growth, change and opportunity for businesses and their owners and investors: a chance to start a new business, bring a new product line into the fold, partner in a can’t-be-missed investment opportunity, implement a beneficial tax strategy, or realize and benefit from the goodwill invested and developed over 25 years of hard work.
It also means risk assessment and mitigation. Each Mergers and Acquisitions transaction is incredibly complex and involves numerous facets of business and law, including finance, tax, contract law, employment law and benefits, securities law, intellectual property and other legal considerations particular to industry and transaction, such as the current law on non-compete agreements in your industry. As such, each M&A transaction needs an attorney and firm with the legal knowledge, attention to detail, and ability to guide and advise the client strategically through each stage of the deal until closing (completion of the deal) and beyond.
Choosing the Advisors. Each Mergers and Acquisitions deal is unique, with different variables and factors to account for and address along the way from a transaction’s start to its close. However, every transaction has certain things in common, one of which is the general principle that an M&A transaction is complex and detailed process that should be addressed in a step-by-step approach with the right advisor, or team of advisors, at your side. A business involved in a transaction would be well-served by forming a strategic advisor relationship that combines ongoing and highly engaged communication, a comprehensive and detailed approach to M&A and skilled and insightful expertise. Your advisor should bring to the table the appropriate skill, the strategic decision making and advocacy, negotiation and management abilities to bring the deal to close.
Cost. As for cost, it varies with the deal, many firms and lawyers conduct Mergers and Acquisitions transactions on the hourly billing basis. This can be an effective way to operate, but alternatives exist. Some firms and lawyers offer flat rates or hourly/flat-rate combinations that can bring stability and predictability to a budget. Which is the right fit depends on the transaction and the parties, including goals and timelines.
The information herein is not legal advice and does not create an attorney/client relationship. The information is in the form of legal education and is intended to provide general information about the matter. The above is not, nor is it intended to be, legal advice. Consult your attorney with questions.