Given the unusual circumstances of running a business during a pandemic, many companies are looking to change how they do business, including mergers and acquisitions.
What are Mergers and Acquisitions?
Mergers and acquisitions (“M&A”) are transactions where the ownership of companies is transferred or consolidated with other entities. Businesses may seek to merge with a larger, more established company to better ensure its long-term existence. On the other hand, larger and more well-positioned companies may decide the time is right to acquire a competitor or complimentary business to add to its business or improve its competitive position.
Factors to Consider in a Merger or Acquisition Transaction
Below is a list of just a few of the aspects you are likely to confront in a merger or acquisition:
Three typical methods to acquire a business:
- Purchase of the company’s assets
- Purchase of the company’s stock
- Direct or indirect merger with the company
Preliminary Agreements:
- Term Sheet
- Confidentiality Agreement
- Exclusivity Agreement
Due Diligence:
- Determine the value of what you’re getting
- Understand the specific assets and liabilities involved
- Decide how to acquire and restrictions on future use
- Create a plan for integration of operations
- Provide disclosures
The Agreement:
- Merger Agreement
- Stock Purchase Agreement
- Asset Purchase Agreement
Closing and Post-Closing:
- Delivery and execution of documents
- Closing certificates
- Third-party consents
- Other related agreements
- Transition plan
