Navigating M&A Transactions: A Legal Guide for Small and Mid-Sized Businesses

Mergers and acquisitions are major events in the business lifecycle. They often indicate some measure of success, and they usually mean that new opportunities are on the horizon. But, in order to realize these opportunities, businesses (and their owners) need to navigate the M&A process successfully. Here is an overview of the major legal steps involved:

Due Diligence

Due diligence is critical for both buyers and sellers in M&A transactions. While buyers need to know what they are getting for their money, sellers need to be confident that their buyers will be able to close the deal.

Structuring the Deal

There are numerous potential ways to structure a merger or acquisition. Deciding between an asset purchase and a stock purchase is just the start. The structuring decisions you make at the outset of the process can impact everything from the value of the deal to its potential tax implications.

Securing Funding and Negotiating Financing

Unless the buyer will be paying cash or the seller will be providing seller financing, the buyer will need to secure funding before the deal can close. Here, too, there are a variety of potential options—and, while this is primarily up to the buyer, the seller has a strong interest in understanding and approving the buyer’s financing as well.

Dealing with Third Parties

Along with investors or lenders, closing a merger or acquisition will usually involve dealing with a variety of other third parties. For example, the buyer and seller may need to work together to secure waivers and consents from the target’s vendors, and they may need to address existing employment agreements, non-competition obligations and other commercial contracts as well.

Tax Planning and Mitigation

When pursuing M&A transactions, minimizing tax liability is one interest that the buyer and seller typically have in common. Without careful planning, mergers and acquisitions can have unintended tax consequences, and this can have a substantial impact on the deal’s value for both parties.

Resolving Issues Without Jeopardizing the Deal

When going through the dealmaking process, it is not uncommon for issues to arise. Unless an issue warrants calling the deal off, the parties will need to work closely with their counsel to find a mutually agreeable path forward.

Closing the Deal and Moving Forward

With the deal negotiated and the buyer’s financing and all necessary consents, waivers and approvals in place, it is finally time to close. After closing, the seller will need to work with its counsel to ensure transfer of payment, and the buyer will need to continue working with its counsel as well to ensure a smooth transition and seamless integration.

Contact the M&A Lawyers at Rendigs

If you are preparing for a merger or acquisition, the M&A lawyers at Rendigs can provide the insights you need and guide you step-by-step through the process. To get started with a confidential initial consultation, give us a call at 513-381-9200 or tell us how we can help online today.