Mergers and acquisitions can be a complicated process. That’s why firms need a qualified and experienced business law firm on their side when going through this sometimes lengthy process. In today’s blog from Checkett, Pauly, Bay & Morgan, our business law expert discusses the top issues arising from mergers and acquisitions.
Approval of the Deal Structure
Stakeholders in the company all want the best possible outcome after a merger and acquisition goes through. Various steps in the process may hold up or even derail a merger and acquisition, including:
Transfer of liabilities
Consent of third parties
Stockholder/investor approval
Tax consequences
A business law expert can help iron out differences among stakeholders during the merger process.
Due Diligence
Both companies want to put their best foot forward. However, both sides must perform their due diligence during a merger and acquisition. Red flags may pop up during financial reports, tax audits, revenue projections, investment capital, credit assessment, and more. Business law attorneys know what to look for when examining a business’s financial books and reports. If something is out of line, the attorney may consult with an independent accountant.
Equity Valuation
Complicated corporate equity valuations are precisely why companies must practice due diligence when it comes to a large transaction. Equity takes into account assets, revenue, and debts. Equity allows for more flexibility to manage the buyer’s finances related to the deal. Business law experts compile financial reports and statements to work out how best to proceed with buying out a company.
Representations and Warranties
Honesty is the best policy when it comes to mergers and acquisitions, but not everything may be disclosed right away. The target company must disclose as much as possible (while obeying a nondisclosure agreement to non-interested parties). Think intellectual property, tax liabilities, debt load, employment numbers, contracts, and compliance with the law. A business lawyer can determine whether or not the unexpected issue is a deal breaker.
Liability
What happens if something goes awry or there is some issue in the future? That’s where liability comes into play. Stakeholders on both sides must iron out who is responsible in case there are future damages or potential claims made against the buyer. Does the target have a measure of responsibility, or do the new owners? Business law experts can work these problems out during your merger and acquisition.
Business Law in Joplin, MO
Business law is one of our top areas of expertise. Chuck Pauly has been practicing law for nearly 40 years and has worked extensively in mergers and acquisitions. Contact Checkett, Pauly, Bay & Morgan or call (417) 358-4049 if you need representation during a merger and acquisition.