A company acquires another business for various reasons, such as to increase its product offerings, diversify, gain a larger market share, and cut out competition. It can also be a way to boost sales and revenue. Companies can make acquisitions through a friendly or hostile takeover. Hostile deals occur when the board of directors and shareholders of the acquired firm oppose the deal, while a friendly one occurs when both parties agree to the terms.
Generally, an acquisition agreement includes a purchase price and conditions that must be met before there is a legal obligation to complete the transaction. The purchase price is typically paid in cash or stock. Alternatively, the parties may negotiate a payment structure that includes a mix of cash and debt. Both sides must also provide representations and warranties, which are statements about their businesses and assets to ensure transparency.
M&A requires the involvement of a wide variety of stakeholders, including employees, investors, and customers. The success of a deal depends on how well all parties are prepared. Failure to consider all the implications of a sale can create friction and even cause the failure of the deal altogether.
A company can get the most out of M&A by preparing early and consulting with M&A lawyers. It’s important to hire a lawyer who has extensive experience in M&A transactions. If you’re unsure about which attorney to hire, you can search online for reviews and third-party directories like Super Lawyers.
