Some Important Legal Considerations for Mergers and Acquisitions Resources

Mergers and acquisitions for any company and entity, is a complex transaction. It requires important strategic business planning and legal due diligence, which can be executed only by an experienced mergers and acquisitions lawyer. A lawyer helps to guide the entities through the various legal steps and procedures. Hence, let’s consider some important legal issues in the A&M Process:

Conduct Due Diligence

I extremely feel the need for due diligence, by both the parties, during a merger or acquisition. It applies equally to both the selling and the acquiring company.

Selling Company

Selling Company takes the necessary steps which can maximize the value of the company and closing deal. To achieve the target, the seller company must produce complete, and get accurate documentation.

Acquiring Company

Then, the acquiring company reviews and analyze the documentation to assess if it supports the closing deal. They also identify any red flags or risks in the process.

The Process of M&A

The seller offers all the accurate information about the company’s corporate governance, financial liabilities, capitalization schedules, and tax information. The operating information, customers and vendors, personnel and labor relations, payroll and benefits, are also included in it. Furthermore, the company gives detail documentation of real property, intellectual property, contractual rights and obligations, research and development, and any other special industry considerations. Here, you must need a Due Diligence Lawyer to get assistance in all the transactions. I have experience of years in assisting the firms of international repute in the merger process.

Corporate Governance Documentation

This is one of the critical areas of due diligence and requires the seller to open its incorporating documents, minutes from board meetings, shareholder materials, and bylaws. It is all about the locations where the seller does business. It also corresponds to any previous deals, changes in control and corporate reorganization, policy manuals, stock transfer ledger, organizational charts, and corporate codes of conduct. The press releases and bank accounts, are also part of this process. So, a seller needs to ensure timely and complete disclosure, to alleviate any fear, on behalf of the acquiring company, of unexpected problems.

Prevention of Anti-competitive Effects

In some countries, the proposed transactions that affect commerce, are over a certain size, and are reviewed by governmental agencies. It helps in prevention of anti-competitive effects -monopoly. Hence, most large M&A, include provisions relating to how the parties will work together during a potential antitrust review.  Here, seller company wants certainty that the deal will close irrespective of the time it takes for antitrust clearance. But, acquirers want the option to walk away from the deal, if it is no longer consistent with its economic interests.

Here, I (Jeremy Lee Chen Seong), feel that mergers and acquisitions lawyer can help negotiate a mutually acceptable antitrust-related provision which is necessary to prevent the deal from falling apart, even before any antitrust review. The lawyer will also help in addressing the dispute of taxation during the corporate transactions.