A lawyer who works on mergers and acquisitions will be up to date on the current legislation and how they apply to these transactions. They will also know what the best legal procedures to follow are for each type of transaction.
Variety is one of the main features that M&A attorneys like about their practice area. They work in various unique situations and deal with companies from different industries.
Negotiation
A merger or acquisition is a complicated process that involves many stages. An M&A attorney will draft and negotiate a letter of intent, conduct due diligence investigations, and create special-purpose entities for the transaction.
Lawyers prepare all the necessary legal documents, including non-disclosure agreements, confidentiality agreements, employment contracts, purchase/sale agreements on assets purchased from one business to another, consulting contracts, vendor agreements, and indemnity agreements. They also prepare a definitive purchase agreement which finalizes all terms and conditions of the deal.
A good M&A lawyer Denver will negotiate for the best price for your company, considering factors such as comparative market analysis, your 409A valuation, and financial performance trends and projections. They may also negotiate for clauses such as covenants and sensitivity analyses that protect the buyer from post-closing liabilities. They also negotiate for reps and warranties to ensure the accuracy of the information given to the buyer during the due diligence process (inaccuracies after the closing can result in claims against the acquirer for breach). Lastly, they prepare and execute transfer taxes.
Due Diligence
An attorney who practices M&A law will know the most recent legislation and how it applies to these kinds of transactions. It involves carefully examining legal papers, contract analysis, and compliance evaluation. From a law firm’s perspective, it plays a pivotal role in ensuring that M&A deals are successful by mitigating unanticipated legal risks.
In the due diligence phase, M&A lawyers research both companies involved in a deal to ensure they are financially sound and regulatory compliant. They also evaluate intellectual property, such as patents and trademarks, and assess contracts for hidden obligations or liabilities that could derail the deal.
In addition, an M&A lawyer also conducts a people component of due diligence. This includes evaluating employee-related documentation such as employment agreements, compensation packages, and benefits policies. They may also consider severance packages and whether they comply with 409A regulations. The insights gained from due diligence will help plan for the seamless integration of the target company into the acquiring firm. In the end, M&A attorneys will submit a report detailing their findings.
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Contract Drafting
Contracts are a necessary part of any business transaction, and contract drafting is one of the most essential skills that M&A lawyers have. A contract is an oral or written agreement with legal force behind it. Three things are required: an offer, an acceptance, and contemplation. An offer is a proposal made by one party to another; an acceptance occurs when the other party accepts the conditions of the agreement; and consideration is the benefit each party anticipates receiving from the contract.
Lawyers are responsible for contracts drafted and reviewed as part of the merger and acquisition process. They pay attention to detail to ensure that the final contracts reflect the terms negotiated between the parties.
This task is time-consuming, requiring a lawyer’s skills to ensure the contract is watertight and future-proofed. They also know how to identify loopholes that could expose their clients to liability, and they can help their clients understand the contract terms.
Dispute Resolution
In M&A deals, disputes may arise for various reasons. For example, pre-signing disputes can arise for alleged infringement of non-disclosure provisions agreed to in Non-Disclosure Agreements (NDA). Moreover, disputes related to letters of intent (“LoI”) can also occur.
Purchase price-related disputes are also widespread in the post-closing stages. These dispute claims can often be complex and technical, requiring the appointment of expert arbitrators in arbitration proceedings. Furthermore, dispute claims related to ancillary restraints in SPAs, such as non-competition and non-solicitation, may also trigger complex and technical arguments.
M&A lawyers need to examine the procedures and content of a dispute resolution clause in a transaction. Arbitration is a good option because the parties can flexibly agree on mechanisms for deciding their disputes rather than being subject to standard statutory rules that apply in litigation processes. In addition, arbitration offers greater privacy and anonymity than judicial-centric litigation processes.
