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By: Lankford Law FirmNovember 17, 2018
Things To Legally Consider For Mergers And Acquisitions In The U.S.
Buying or selling a business can be a complicated process in Florida. If you are buying or selling a business in this state, keep reading. The right legal help is imperative for negotiating an appropriate price and for preventing and managing risks on both sides of a major transaction.
Large, important transactions must be structured on the clearest, most favorable terms and provide full legal protection to all parties involved. The failure to be advised by an experienced business lawyer often results in subsequent legal disputes that could easily have been avoided.
HOW ARE MERGERS AND ACQUISITIONS DEFINED?
This is a brief look at the legal side of mergers and acquisitions, the problems that you may encounter with a merger or with an acquisition, and the solutions to those problems.
A merger happens when two or more distinct businesses combine to create one company. A merger of equals happens when neither business is designated as acquiring the other business. The stockholders of both companies trade in their shares for shares from the new company.
WHAT ARE THE WAYS A BUSINESS MAY BE ACQUIRED?
When one company directly purchases another company, it’s an acquisition. Acquisitions can happen in two ways – through purchases of stock or through asset purchases:
Stock purchases: The acquiring company buys the shares of the target company from its shareholders and gains all of the target company’s assets and liabilities. The complexity of a stock acquisition often depends on the target company’s number of shareholders.
Asset purchases: The acquiring company buys the assets of the target company including equipment, stock, inventory, and facilities. The purchaser chooses which assets to acquire, so asset purchases are often considered more advantageous than stock purchases.
HOW WILL A GOOD BUSINESS ATTORNEY HELP YOU?
A qualified Florida business lawyer can help you understand what the advantages and disadvantages are of an asset purchase vs. a stock purchase in any particular potential business acquisition.
If you are a selling a business in this state, you must see to it that you are not making any false or exaggerated representations that will come back to haunt you. If you are a purchaser, you must make sure that the selling party will stand by its representations about the business.
A business lawyer can ensure that the documents involved in a Florida business merger or acquisition are complete, accurate, and reflect your expectations as a buyer or seller. A good business attorney can also help you with and advise you regarding:
debt and equity financing agreements
corporate reorganization or consolidation
partnership and shareholder agreements
It is essential to conduct due diligence before you initiate any transaction such as the merger of two or more companies, the purchase of a business, or any related activity. You will need a skilled, diligent attorney who has substantial contract, acquisition, and merger experience.
WHAT IS REQUIRED TO BUY OR SELL A BUSINESS IN FLORIDA?
Listed here are the steps you will need to take prior to selling a business in Florida. Go through these items with your business attorney to ensure that you have met all of your obligations and that you have adequately protected your long-term interests:
If you are leasing business space, determine how the lease can be reassigned to the buyer. Landlords need to know that your buyer will continue the operation – and the rent payments.
Determine if your licenses can be reassigned or if your buyer must obtain new licenses.
Have your business lawyer review your contracts with clients, service providers, and vendors to ascertain what your responsibilities are to those parties when you sell the business.
Conduct a lien search. If liens are outstanding, satisfy them or arrange for the payment. If you do not disclose outstanding liens against the business, you will probably be violating the sales agreement.
Have all of the appropriate financial papers, statements, and disclosures ready in advance for the buyer.
WHAT IF THERE ARE COMPLICATIONS WITH A BUSINESS ACQUISITION?
If you are the buyer, realize that purchasing someone else’s business might obligate you to take on a variety of responsibilities and to handle a number of unresolved matters.
Have your business attorney ensure that everything about the purchase is legal and legitimate. If there are complications, your attorney can explain them to you and possibly even clear up those complications for you.
WHAT MUST BE CONSIDERED IN ANY MAJOR TRANSACTION?
The top consideration in either a merger or an acquisition is how the transaction is structured. A number of conditions typically must be met before a merger or acquisition can proceed. Those conditions could involve loans, liens, stock, employee contracts, or almost any related matter.
A company’s financial issues, sales, debts, services and/or products, intellectual property, and customer relations all must be considered. Have your attorney help you review the documents, performance, and finances of a company before you merge with or acquire that company.
The key to successfully completing a business acquisition, merger, or sale is to avoid unexpected complications by closely scrutinizing the details. A skilled Florida business lawyer will help you attend to those details and will help you avoid unexpected obstacles or complications.
WHAT SHOULD YOU AVOID IN A TRANSACTION?
Speaking frankly, one of the most common problems with mergers and acquisitions is the use of improper forms downloaded from online legal document companies
Standard contracts cannot take unique situations into account. Signing the wrong contract could leave you at risk, so avoid using any standardized forms – especially in a major transaction.
A reliable business attorney can draft – or review – all of your merger or acquisition contracts and documents to guarantee that your goals are accomplished and that your interests are protected.
WHAT ABOUT THE FUTURE?
When the transaction is complete, your lawyer can help you plan for the future of your company, help you avoid legal disputes, and keep your business running smoothly by ensuring that you have policies and documents in place to deal with any unexpected complication or circumstance.
No business owner likes taking time off to handle legal matters. If you are a business owner in Florida, this is the right time to arrange a consultation with an experienced central Florida business attorney. It may be the best business investment you make.
After graduating from Davidson College, Melody Lankford earned her J.D. from Florida State University’s College of Law in 2004 and was admitted to the Florida Bar that same year. Ms. Lankford joined Raydon Corporation as in-house counsel in 2004. She worked there until 2012, when she founded the Lankford Law Firm. She is an experienced Daytona Beach small business attorney who offers sound legal counsel and experience-based insights to her business clients