Mergers and Acquisitions (M&A): Legal Support
Legal support of transactions of mergers and acquisitions (M&A)
Constant business development is necessary for its effective functioning, and therefore entrepreneurial processes do not stand still, some companies are liquidated, new ones are opened, and some are combined for further joint development. The process of mergers and acquisitions of companies is becoming a necessary phenomenon of a market economy. This allows the business to continue operating and, in some cases, grow and develop. In the international business community, such transactions are called merge and acquisition (acquisition), which received the abbreviation of the M&A transaction.
The merger procedure is a combination of two or more companies into one legal entity, in which the original companies cease to exist, and property, space, and labor resources are transferred to the newly created organization. At the same time, the newly created legal entity assumes the obligations of the original companies.
A takeover is a transaction in which one company acquires control over another by acquiring a part of its authorized capital, while maintaining the legal independence of the second.
The objectives of a merger or acquisition of companies are:
- increasing technological capabilities and expanding the market;
- reduced competition in the segment;
- growth of the company and increase due to the reorganization of its value;
- access to international markets, etc.
Regardless of the chosen purpose of the reorganization, in most cases, the decision to conduct a company reorganization procedure becomes a necessary measure to improve the efficiency of an existing business, expand it, and enter new markets, including through the acquisition of additional assets, but in some cases the decision to merge or take over is a necessary measure to preserve the business in difficult economic and political conditions. As a rule, any decision on business restructuring is accompanied by many issues that need to be addressed, both in the preparation process and in the implementation of the reorganization process.
After making a decision on business reorganization, in order to select a merger or acquisition procedure, it is necessary to carry out a number of activities:
- analysis of business processes of companies;
- valuation of companies, including accounting for all assets (financial, labor, technological, etc.);
- assessment of possible risks (tax risks, loss of markets, etc.);
- development of a strategy and selection of a reorganization procedure.
At the same time, it is necessary to reflect the possible options for mergers and acquisitions, they are distinguished on the following grounds:
- geographical principle of company reorganization;
- scope of the business. In this sense, transaction options can also be divided into vertical (raw materials-products), horizontal (one branch of activity), generic and conglomerate;
- by type of entrepreneurial activity and field of work.
To carry out a specific merger or acquisition procedure, to select the merger and acquisition option, it is necessary to organize work in several areas:
- prepare the necessary documents for the legal registration of the selected reorganization procedure;
- conduct an analysis (legal, financial, tax) and accounting of concluded agreements and contracts, obligations under which are not fulfilled;
- assess the prospects for a merger or acquisition for further business development;
- carry out work on concluding a transaction in accordance with the chosen merger or acquisition procedure.
Mergers and acquisitions are a rather lengthy process in which not only legally significant actions are taken to formalize the transaction itself, but also actions related to interaction with partners, regulation of labor relations with employees, reformatting of technological processes, as well as obtaining permits. All these measures must be taken into account when developing a business reorganization strategy.
It is important to note that carrying out the reorganization procedure on your own may not always take into account all the necessary nuances or possible risks. To solve this problem, as a rule, third-party experienced lawyers in the field of mergers or acquisitions of companies are involved. The participation of such specialists allows entrepreneurs to:
- save time for the procedure of business reorganization;
- minimize possible risks;
- take into account all areas, tasks and issues that will need to be resolved during the reorganization, including those related to labor resources, taxation, permits, etc.
Mergers and acquisitions are complex in structure, both financially and legally. In this sense, it is not enough to document a merger or acquisition agreement; it is necessary to bring all areas of the company's activities to the current regulatory documents, including. For this, experienced lawyers specializing in corporate law are involved, who will conduct a comprehensive event with a comprehensive analysis of existing companies and develop a reorganization strategy that will take into account the interests of all parties to the transaction, reflect all important points in the documents being drawn up and minimize unwanted risks.
- Advising clients on M&A
- Legal analysis of the activities of companies subject to merger or acquisition, as well as an assessment of the prospects for reorganization
- Development of a strategy for conducting a merger or acquisition procedure
- Preparation and execution of documents for M&A
- Legal support of mergers and acquisitions
- Representation of the client's interests in (M&A)