At EPGD Business Law, our attorneys will guide you step-by-step during any Merger & Acquisition process. We will provide guidance regarding the drafting, negotiation, and performance of contracts for the purchase/sale of your business/company. We will handle any transactions with careful planning and attention to detail.
Mergers and acquisitions (M&A) refer to transactions between two companies combining in some way or form. Although both terms come hand-in-hand, they come with different legal meanings. A merger consists of two companies of similar size, combining to form a new single entity. Whereas an acquisition refers to a situation where a larger company acquires a smaller company, absorbing the business of the smaller company.
Whether it’s an acquisition or a merger, the main steps are generally the same:
- Letter of Intent
The first step is for company A which initiates the merger/acquisition, to verify via a letter of intent that company B is interested. It should lay out the basic offer terms.
- Negotiations and Purchase Agreement
Then comes the negotiation period. This is a time where each party’s attorney gives its point of view and negotiates specific clauses to best serve the interest of the client. For example, we might want to have a non-competition clause or a certain amount of the funds to be held in escrow for a specific period of time to make sure the other party meets its obligations, etc. There can be a lot of back and forth in this stage. The attorneys will then put all the terms in a purchase agreement for the parties to execute.
- Due Diligence
Once a purchase agreement is put into place, comes the essential phase of due diligence, carried out by the attorney of the acquiring company. This due diligence period, which can last a few weeks and sometimes a couple of months, makes it possible to verify that everything is as presented. The attorney will verify the licenses, the leases, the employment contracts, the assets, etc. At the end of the due diligence period, the attorney will advise his client whether or not to continue the transaction.
Finally, the closing brings together the final steps in the merger or acquisition process. Closing documents are prepared for the parties to execute.