Understanding the Stages of a Mergers & Acquisitions (M&A) Deal
In the fast-paced world of business, expansion and growth alter the shape and direction of your company. As your company grows and changes, so too do the goals and, ultimately, the challenges. You may not have started out with the intention of ever acquiring or merging with another business or selling what you worked so hard to build.
Mergers and Acquisitions (M&A) deals stem from this evolution of your business. They’re a sign of success. Whether you’re merging, selling, or acquiring, it’s important to understand each stage in the process.
We’ve already discussed the vital role a business attorney plays in the process. Our goal is to prepare our clients for the process in order to shield them from surprises and protect everything they’ve worked so hard to build. After all, an M&A deal is an opportunity to take your business from a local enterprise to a global powerhouse.
Marketing and Preliminary Review
Before the ink hits the paper, there needs to be a market for such a deal. This is where potential buyers or sellers express interest in an M&A deal. Our attorneys help assess the strategic fit of the interested parties before moving forward.
It’s important to know your market and understand the available options before entering into negotiations. You need to be equipped with all the necessary information or risk the potential of losing out on significant value. A preliminary review is not as thorough as the due diligence stage which we’ll get into in a moment, but it should be at least a cursory overview of your options.
Negotiation
Once you have found a fit, it’s time to enter into negotiations. In most cases, the involved parties will sign non-disclosure agreements to seal the details of the negotiations and protect the information being disclosed.
This is where a business attorney's experience becomes invaluable. Our attorneys act as skilled mediators, advocating for our client's interests while finding common ground with the other party or parties. We focus on finding agreeable terms from purchase price to post-closing obligations to craft a well-defined initial agreement.
Letter of Intent
Once negotiations reach a point where both parties feel comfortable moving forward, a Letter of Intent officially and legally states the intention of the two parties to enter into an agreement. This letter outlines the agreed-upon terms and puts you both on the clock to complete the process.
A business attorney's role in this stage is pivotal in translating the terms into a legally binding contract. Our attorneys meticulously craft LOIs, addressing critical issues such as confidentiality, exclusivity, and the timeline for due diligence. Our precision in this stage minimizes misunderstandings and sets the stage for a smoother execution of the deal.
Due Diligence
Now comes potentially the most important stage. Due diligence is an opportunity to verify all the information shared to this point and uncover any hidden issues or even hidden potential that wasn’t disclosed previously.
This is like when you’re buying a home and need to do a walkthrough. You want to verify everything is as it has been claimed and see if there are any repairs or issues that need to be addressed before the deal is finalized. This involves scrutinizing various company records including:
Financial statements
Employee records
Contractual obligations
Intellectual property
These are just a few of the many elements that need to be closely reviewed and our attorneys will play a key role in doing this for you. We know what to look for and how to find it.
Closing
The culmination of an M&A deal is the closing phase, where all agreements are executed, and ownership officially changes hands (or ownership is merged). A business attorney plays a central role in ensuring the transaction adheres to legal and regulatory requirements.
At White Summers, our attorneys oversee the preparation and execution of the closing documents, ensuring compliance with all relevant laws and regulations. We facilitate the transfer of assets, conduct a final review of contracts and warranties, and ensure that all conditions of the sale are met. Contact our team if you’re considering pursuing an M&A deal and make sure your deal is done right.
By White Summers