What Are Mergers and Acquisitions?
Mergers and acquisitions are corporate transactions through which companies buy others or merge together to form a new company:
- Merger. A merger occurs when two companies come together to form a new company. This is also known as a consolidation. Neither of the original companies exists independently under the new agreement.
- Acquisition. An acquisition occurs when one company buys another. The company may buy the physical assets, stock, or equity, or all of it. The acquired company ceases to exist after the deal is made.
Many legal issues can arise during the course of these deals. Two federal agencies may become involved to ensure deals are fair and in compliance with the law. The Federal Trade Commission deals with antitrust laws and fair competition, while the Securities and Exchange commission ensures the deal does not involve inappropriate financial conduct, such as insider trading.
What Do Mergers and Acquisitions Lawyers Do?
Deals involving the merging or buying and selling of companies can be complicated, especially for large companies. Legal issues abound, including compliance with laws, contracts, negotiations, intellectual property, and disputes.
A merger and acquisition lawyer is a type of corporate lawyer who handles many of the details of a sale, purchase, or merger. They rarely litigate, and in fact, when going to court becomes necessary in one of these deals, many companies hire separate counsel. Some examples of what mergers and acquisitions lawyers do include:
- Develop strategies for merging, buying, or selling a company
- Consult and advise on the risks and benefits of a deal
- Perform due diligence, detailed research of a company to be bought or merged
- Identify any potential legal issues in a transaction
- Identify risks and liabilities
- Ensure adherence to federal and state laws and regulations
- Negotiate costs and details of transitions
- Write up contracts and other documents
- Review contracts and documents from another company
- Guide the entire process from start to finish
Do I Need a Mergers and Acquisitions Lawyer?
The average person will never need to work with a mergers and acquisitions lawyer. On the other hand, these lawyers are not reserved for large corporations. If you own a business of any size and are considering a sale, a purchase, or a merger with another company, you must consult with a lawyer. Get them involved from the beginning to ensure you have a smooth transition, comply with laws, and get a good deal.
How Mergers and Acquisitions Lawyers Benefit Their Clients
Even if you only have a small business, the act of merging, selling, or buying can become very complicated. You risk losing money, incurring fines from a government agency, or ending up with a company with a lot of liabilities. The right lawyer provides several benefits when involved in the entire process, right from the start:
- Get the facts. If you see a company that looks good to purchase, there could be many problems under the surface. A mergers and acquisitions lawyer has the experience and resources to dive deep and find out what you’re getting into and if it’s a mistake.
- Minimize risk. Buying a company or merging with one is risky. You may not even know what all the risks are, but a lawyer does. They’ll find the risks, explain them to you, and mitigate them as much as possible if you proceed with a deal.
- Comply with the law. A deal may seem straightforward, but there can be all kinds of legal pitfalls. You may be taking on serious liabilities. The transaction may have some legal challenges. A lawyer can ensure that you make a deal that is above board and won’t cause you problems later.
- Get a good deal. Mergers and acquisitions lawyers are experts at negotiations. They will represent you in a deal, negotiating on your behalf. With their knowledge, experience, and due diligence, they have the tools to get you a deal that is fair and benefits you.
- Deal with details. The details and paperwork for a sale or merger, even between smaller companies, can be overwhelming. Let a lawyer take over those details for you. They know what to do when it comes to reviewing and drafting detailed documents.
How to Choose the Right Mergers and Acquisitions Lawyer
Many mergers and acquisitions lawyers work in-house with large corporations. You should still be able to find individual attorneys and firms offering these services. Look for corporate lawyers and those specializing in transactions.
Interview firms and lawyers before choosing someone to ensure it will be a good fit. Ask them about their experience handling mergers and acquisitions, the types of companies they have represented, and what their past clients say about them.
The right lawyer should have a strategy ready for you and be able to describe what they’ll do to help you make a deal. You should feel comfortable working with them and confident that they will benefit your company. Talk about fees before hiring a lawyer and make sure the cost brings value.
Working with a mergers and acquisitions lawyer is a must for anyone in business handling a purchase, sale, or merger. There are too many risks and potential for liability to try to go it alone. Even if you have a small business, consult with a lawyer before making any deals with other companies.