Sometimes, succession planning for a business includes selling it to new owners. Some entrepreneurs choose to acquire an existing business rather than start from the ground up. In addition, existing companies will often combine with one another. Together, these transactions are known as mergers and acquisitions (M&A).
These deals can allow successful owners to diversify their holdings by experiencing a liquidity event, permit entrepreneurs to explore new markets, maximize profits, acquire valuable technology or intellectual property, improve efficiency, reduce marginal expenses, and allow the new business entity to expand into previously untapped markets. Despite the potential benefits, however, there are certain risks inherent to the mergers and acquisitions process.
The Business Transactions & Corporate Law practice of Patrick, Harper & Dixon has a well-earned reputation for working closely with owners and senior management throughout Hickory to provide comprehensive and sound guidance during each phase of these transactions. Our attorneys represent both purchasers and target companies in carefully executing their merger or acquisition while taking into account their business objectives.
Representing A Broad Array Of Companies
Our mergers and acquisitions team serves buyers and sellers in all manners and sizes of transactions, and we give each one the attention it deserves while being efficient relative to the scope of the transaction. Patrick, Harper & Dixon has advised businesses in manufacturing, distribution, retail sales, transportation and logistics, healthcare, pharmaceuticals, medical products, durable goods, and many others.
Due to the complexity of M&A transactions, our attorneys often draw upon other practice areas within the firm to ensure sufficient expertise goes into every deal. When you retain our law firm, you can expect solid legal counsel each step of the way and a commitment to delivering the highest level of professional service.
Understanding Acquisitions
An acquisition is simply the purchase of one company by a new owner. These deals are fairly common and may be structured as follows:
- Stock purchase: the buyer will purchase the owner of the target company’s equity ownership and thereby transfer ownership.
- Asset purchase: the buying company will purchase the substantially all of the assets of the selling company, including inventory, equipment, machinery, intellectual property, and sometimes land
The Basics Of Mergers
A merger occurs when two existing business entities join to form a single entity. After the merger, the independent ownership and operation of the two formerly separate companies come to an end.
Steps To Completing Transactions
An M&A transaction begins with one company contacting another to determine its level of interest in a possible deal. If the initial discussions are fruitful, the purchasing business will request details from the target business to determine how much the potential deal is worth.
The purchasing company will at some point make an initial offer to the target company, normally in the form of a non-binding Letter of Intent, which will trigger additional discussions between the companies.
Once the basic business terms are set out in a Letter of Intent, the parties will begin due diligence in earnest. During this stage, the acquiring company will carefully examine the target company’s books (financials, assets and liabilities, cash flow, and more) to decide whether the initial valuation was correct. Due diligence can help confirm or adjust that valuation as more details about the target company are shared.
As due diligence progresses, the companies will negotiate a binding agreement. A contract will be drafted and the detailed terms of the purchase and sale will be formalized through negotiations.
In parallel, the buyer is frequently working through the terms of financing the acquisition with its lender or other financing partners, which also involves the negotiation of legal documents.
The deal then closes and additional steps are taken to complete the process of transitioning the day-to-day operations of the two businesses.
How Patrick, Harper & Dixon Can Help
Our law firm knows that every merger and acquisition requires close attention to detail and a comprehensive understanding of business and corporate law. We help with these and other aspects of M&A transactions:
- Due diligence. Our firm will guide due diligence to ensure every essential aspect of the process is covered, whether you are the purchasing or target company.
- Documentation. M&A deals come with a significant amount of legal paperwork, so we prepare everything from letters of intent and confidentiality agreements to intellectual property transfers and the final purchase and sale contract.
- Title transfers. Title to real estate, equipment, and other assets have to be transferred to the acquiring or new company. A comprehensive title search must also be conducted and reviewed. We handle all aspects of this step.
- Contractual matters. Third parties may need to release either the purchasing or target company from contractual obligations so the transaction can be completed. We help clear these obstacles for your business.
- Negotiations. Mergers and acquisitions involve a great deal of negotiating, and we manage this with your company’s interests and goals in mind.
- Regulatory and compliance. M&A deals invoke various state and federal laws, especially for certain highly regulated industries like banking and finance. We help ensure the deal is cleared from a legal standpoint.
- Banking or financial
Contact Our Hickory Mergers And Acquisitions Attorney
When you retain Patrick, Harper & Dixon, you have a dedicated attorney who is ready to handle your merger or acquisition from day one. Give us a call today to get started.
