Mergers and Acquisitions Lawyer | Embedded Counsel

Mergers and acquisitions are terms referring to different financial transactions used to consolidate companies or assets. A corporate lawyer plays a critical role in any merger and acquisition transactions a company chooses to enter into. Embedded Counsel’s team of mergers and acquisition lawyers is committed to providing the highest quality representation to our clients.

Embedded Counsel’s mergers and acquisitions advisory group can help with your company’s strategic business transactions by identifying legal risks and ensuring compliance with laws and regulations. Your legal representative will assist in conducting comprehensive mergers and acquisitions due diligence, negotiate and draft documents for key transactions, and provide guidance on navigating laws. The goal for any merger or acquisition is a smooth and legally sound business transaction that protects the client’s best interests.

Understanding Mergers & Acquisitions

In business law, mergers and acquisitions are high-level strategic business transactions that require legal support from a corporate lawyer. Our Massachusetts mergers and acquisitions attorneys work to ensure all processes go smoothly, everything remains compliant with all regulations and laws, and the client’s best interests are represented. This can look slightly different based on the company consolidation that is happening.

Mergers occur when two companies combine to form a new entity. Typically this is a mutual agreement where both parties will gain strength, increase market share, and achieve a competitive edge by combining forces. This process can involve integrating all processes, assets, and liabilities and requires comprehensive mergers and acquisitions due diligence.

Acquisitions occur when one company acquires or takes control of another company through purchasing stocks or assets. The buyer may then choose to absorb the acquired company or continue its business as a subsidiary organization. Acquisitions also require legal and financial due diligence to identify risks and evaluate the value of the target company.

Other Mergers and Acquisitions Business Transactions

There are also other types of consolidations and business transactions that may require a mergers and acquisitions law firm. These types of transactions can include:

An acquisition of assets occurs when one company purchases or otherwise acquires the assets of another entity. This happens often during bankruptcy proceedings and liquidations of assets.

- Consolidations occur when a new company is made by combining the central business processes but abandons old company structures to form a completely new business.

Divestitures involve a company selling or divesting some of its assets, subsidiaries, or divisions that are no longer performing, do not align with its current business strategy, or are non-essential to the core company.

Joint Ventures involve multiple businesses combining resources and experience on a specific project. This business transaction typically does not create a new entity or corporation.

- Management acquisitions happen when one company’s leadership buys a majority stake in another organization, thus making the company private.

Tender offers occur when one company buys the outstanding stock of another company at a set price rather than the current market value. This is offered directly to the company’s shareholders rather than leadership or the board of directors.

The Stages of Merger and Acquisition Transactions

Whatever type of merger or acquisition your company is choosing to undergo, these business transactions can share common stages in the process. Your Massachusetts merger and acquisition lawyer will guide you through this process, which could take up to several months to complete. Legal stages of business transactions can include:

Non-Disclosure Agreement – signing an NDA typically is the first step in entering into an M&A legal transaction. It serves as an agreement that both parties will not disclose sensitive information learned, especially during due diligence.

Letter of Intent – this document expresses interest in the other company and makes a formal offer. It is not a binding contract but usually includes an exclusivity period, proposed business structure, and target price.

Due Diligence – the process of investigating and evaluating a company for any financial, regulatory, and legal risks. M&A lawyers will work on this along with finance and human resources personnel from your organization.

Negotiations and Documentation – once due diligence is complete, the company can appropriately be valued, and negotiations can begin regarding the terms of the transaction. Legal documents will then be drafted such as the purchase agreement, disclosure statements, and ancillary agreements.

Regulatory Approval – if the companies involved are large enough or depending on the type of transaction, it may be required to get regulatory approval. Your mergers and acquisition advisory team will work with appropriate government authorities to ensure compliance with antitrust and securities laws.

Closing and Integration – once all these steps are finalized, the transaction can execute legal documents, transfer ownership or assets, and begin the process of integrating systems, processes, and structures.

All of these steps could vary depending on a variety of factors, including the type of merger or acquisition your company is undergoing, the size of the companies involved, the complexity of the proposed transaction, and the industry involved. Your legal advisor from Embedded Counsel can help you navigate this process smoothly and ensure that all stakeholders are appropriately consulted. We will provide guidance and make sure you stay informed throughout the entire process.

Regarding Mergers and Acquisitions Due Diligence

When entering into a business transaction like a merger or acquisition, it is important to proceed with due diligence. This term represents the comprehensive evaluation and analysis that your corporate lawyer will conduct in an important step to examine a company’s legal standing, identify potential liabilities, and find any issues that could impact the valuation or viability of the transaction. Due diligence in company transactions can encompass several key target areas of the company, including financial, legal, and regulatory due diligence.

Financial due diligence will evaluate the company’s current economic standing with all revenue streams, accounting processes, and financial statements. The goal is to assess any potential risks and assess the financial health of the organization. This is separate from legal due diligence, which checks for any liabilities, pending litigation, and contractual obligations that the company is already under.

Regulatory due diligence can be considered part of both financial and legal due diligence examination, as regulatory compliance can impact both financial and legal impact. Each of these types of due diligence combines to create a comprehensive view of the company targeted for a merger or acquisition. This part of the legal process ensures that the purchasing company makes informed decisions and mitigates any potential liability.

Compliance with Antitrust Laws

When dealing with large business transactions, a mergers and acquisitions consultant will need to ensure compliance with antitrust laws. The Federal Trade Commission (FTC) has established antitrust laws in an attempt to manage market dynamics and prohibit monopolies. Section 7 of the Clayton Act gives important guidance prohibiting mergers and acquisitions when their creation leads to a monopoly or greatly impacts the market to lessen competition and innovation.

Antitrust laws promote fair competition in the market and attempt to protect the market by prohibiting collusion, market allocation practices, price-fixing, and monopolizations. Antitrust laws are forward-focused, barring any business consolidations that could possibly lead to a harmful effect in the future, rather than requiring proof of any harm actually happening. These laws are enforced by government agencies such as the FTC, the Securities and Exchange Commission (SEC), and the Department of Justice (DOJ), and companies need to ensure their compliance or face strict repercussions.

Every year, the DOJ and the FTC investigate over a thousand filings for mergers and acquisitions. Many involve more in-depth evaluation, and the FTC will present any possible competitive problems so that they can be evaluated. If this happens, your mergers and acquisitions attorney from Embedded Counsel will work to negotiate an agreement between both entities to resolve any issues.

Mergers and Acquisitions Law and Antitrust Regulations

There are a few key pieces of legislation that support antitrust regulations, and anyone approaching an M&A business transaction should be aware of how these might affect their deal. The Sherman Antitrust Act was established in 1890 as a federal statute prohibiting activities that limit or restrict commerce and competition in the marketplace. It was amended in 1914 by the Clayton Antitrust Act that better-outlined price discrimination practices, exclusive dealings, mergers, and acquisitions that dramatically limit competition and overall prevent monopolistic practices.

The FTC added an additional amendment titled the Hart-Scott-Rodino (HSR) Antitrust Improvement Act of 1976, which requires companies to file with the FTC and the Antitrust Division of the Justice Department for certain mergers and acquisitions above a certain threshold. This Act created required waiting periods (typically 15 to 30 days) before an acquisition can be completed, allowing sufficient time for investigations into potential antitrust compliance issues and assessment. If your company falls under the requirements and you fail to file, fines and civil penalties may be issued.

Your company may be required to file a premerger notification under the HSR Act if your transaction meets certain jurisdictional thresholds. At Embedded Counsel, we have an experienced team of business lawyers ready to advise you on required filings, documentation, and strategy for your merger and acquisition transaction in Massachusetts. Trust in the expertise and guidance of legal professionals who understand merger and acquisition law.

Types of Merger Structures

Mergers can be structured in a variety of ways depending on the companies involved in the transaction and how their operations overlap. Here are several common types of mergers:

- Conglomerate Merger – companies merging from unrelated industries that are attempting to diversify a portfolio, mitigate risks, and/or capitalize on new growth opportunities.
- Congeneric Merger – companies merging in the same industry but who produce different products or services. These mergers diversify product offerings, expand expertise, and seize new market segments.
- Consolidation Merger – when two companies are bought and combined under a brand new entity.
- Horizontal Merger – companies merging who are in the same industry and work in the same stage of operations. These mergers can expand market share and eliminate competition.
- Market Extension Merger – companies that sell similar products or services but reside in different geographical markets combine operations to expand customer base, reach new markets, and operate at scale.

Purchase Merger – when a company purchases assets, liabilities, and operations of another company. The target company can either dissolve or continue to legally exist and operate otherwise.

Reverse Merger – when a private company buys a publicly traded company, it allows the private company to become publicly listed without going through the regulatory scrutiny of the traditional initial public offering process.

Vertical Merger – companies operating at different stages of the manufacturing process or in various stages of the supply chain combining operations to streamline functions, reduce costs, and improve efficiency.

Each of these various merger structures can present benefits to a business strategy. If your company is still considering various options in mergers and acquisitions, an attorney experienced in business law can help advise on competitive strategies, objectives, and considerations. Whatever stage you are in planning your company’s merger or acquisition, contact the team at Embedded Counsel for mergers and acquisitions services in Massachusetts.

Financing Mergers and Acquisitions

When one company goes to purchase another company, there are several ways that the sale can be financed, depending on resources, the size of the transaction, and negotiated terms. Companies can be purchased outright or by acquiring stock until the majority share is acquired. Cash is the fastest and simplest way to acquire a company, but this can be limiting as it ties up the acquiring company’s resources while the transaction is being processed.

Types of financing from an investment bank are also available. These include typical debt-incurring financing in the form of term loans, credit, or bonds. Equity financing allows companies to issue securities such as common or preferred stocks to raise capital without the obligation to repay principal or interest, but it can dilute existing shareholders’ ownership. Hybrid financing uses a combination of cash, debt, and equity financing to optimize available capital and supplement in a way that manages risk and preserves company stability.

In cases where the selling company is struggling financially, they may offer acquisition through assumption of debt, where the acquiring company takes on all debt of the target company. Overall, these financing methods depend mainly on the financial strength and positions of the companies involved. Discussing your current strategic situation with a mergers and acquisitions lawyer from Embedded Counsel can help you determine which options might benefit your company most and create the best value for your shareholders.

Contact Embedded Counsel’s Mergers & Acquisitions Attorneys for Help Determine Your Next Steps

If your company is facing a merger or acquisitions on either side of the transaction, you need the expertise and guidance of experienced legal professionals who understand the unique challenges you are facing. At Embedded Counsel, our mergers and acquisitions team is committed to providing you with strategic advice and personalized service. Contact our office today to determine your company’s next steps and get all your questions answered.