by Chris SwiecickiWhat is a Merger and Acquisition Lawyer? When Do You Need One?
Merger and acquisition lawyers help companies that are at a crossroads. They facilitate deals and advise owners who are looking to sell their business, buy another business, or combine assets and resources to create a new entity.
The merger and acquisition (M&A) branch of law brings together multiple disciplines, including accounting, tax law, real estate, government and industry regulations, and more. M&A lawyers must have a diverse skill set (or the ability to assemble a team of people with the appropriate expertise) to handle all of a transaction’s moving parts.
When Should a Business Hire a Merger and Acquisition Lawyer?
Buying or selling a company, or merging with another one, is not something that a business owner should attempt on their own. Even their corporate counsel might not be equipped to handle the transaction. An attorney with merger and acquisition expertise is necessary, and it’s a good idea to get them on board as soon in the process as possible.
The following scenarios will trigger the need for a merger and acquisition lawyer:
- Some small business owners grow their companies with the specific goal of one day striking a lucrative deal to sell it to a larger entity. They should consult with a good attorney early to ensure that their company, and their own compensation, is structured appropriately.
- Whether or not it was planned, potential buyers may start to show interest in a company. Consulting with a merger and acquisition lawyer can be helpful to assess the options, and whether or not it makes sense to entertain offers at all at that particular time. They can also advise on “poison pill” options to prevent hostile takeovers.
- Hiring a merger and acquisition lawyer is a good idea during succession planning if there is no plan to pass the company on to heirs or partners. The attorney can get the ball rolling to find potential buyers.
- When a company finds itself ready to expand and add to its portfolio by acquiring another business, a merger and acquisition lawyer can get the necessary resources lined up and begin to search for suitable candidates.
- A competitor or a company that fits well with a business may go on the market. A merger and acquisition lawyer can structure a viable offer.
Regardless of the circumstances of a sale, purchase, or absorption of a company, it is best to have an M&A lawyer at the earliest stages of the deal. Ideally, they should be the ones obtaining a valuation and crafting the agreement. These transactions are complex and have both internal and external consequences for all of the entities involved. Waiting until a deal is on the table and contracts are already drafted is too late.
M&A Attorney Responsibilities—The Basics
A merger and acquisition lawyer’s job is to advise and negotiate for their client. Throughout the course of the transaction, they will draft and file agreements that pertain to the business assets, employees, debt, and stock. The attorney will work with various accountants, real estate brokers, bankers, and opposing counsel as needed to set up the deal and see it through to completion.
First and foremost, M&A attorneys need to understand their client’s business objectives in order to craft a transaction that benefits the owners, stockholders, and employees. They will map out steps and a timeframe (which typically will take several months) and keep their client informed of the status and progress of the case.
Once the merger or acquisition is complete, the attorney will help to set up any new entities and continue to guide their client as they carry out the integration of assets, staff, and policies.
When the client is the target of a merger or acquisition, the M&A attorney will review the offer and help the company decide whether to accept it, refuse it, or negotiate further.
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Skills That Merger and Acquisition Lawyers Bring to the Table
Lawyers who specialize in mergers and acquisitions must wear many hats and understand a wide array of legal and business accounting topics. Those who routinely work in multiple disciplines can offer their clients the level of expertise necessary to reach the best outcome. Swiecicki & Muskett Attorneys at Law, for example, combine the practice areas of corporate law, taxation, and contract negotiations.
This type of multi-faceted firm can tackle the necessary parts of a corporate merger or acquisition. Whether these services are performed by the firm or outsourced, a skilled M&A lawyer is able to interpret the information and how it affects the proceedings.
Accounting and Business Valuation. Knowing what a company is worth through a business valuation is an essential part of any merger or acquisition. In addition, mergers and acquisitions require expert analysis of financial records and tax returns.
Tax Implications. Buying or selling a company can have a big impact on tax liability. It is necessary to understand the transaction’s tax implications and structure the deal accordingly.
Regulatory Obstacles. Government or industry regulations can prevent a merger or acquisition from moving forward. Antitrust, security, and investment laws are just some of the things that a merger and acquisition lawyer will need to navigate, to make sure their clients are in compliance.
Real Estate. The purchase or sale of a business can include the transfer of land, buildings, and other assets. Knowledge of real estate law and property valuations will help this part of the deal go smoothly.
Intellectual Property. Merger and acquisition contracts need to be clear about who owns or holds the rights to intellectual property. Placing a value on these items is important too.
3rd Party Contracts. Quite often, a company has contracts with lenders and other parties. An M&A attorney can obtain the necessary consent from those entities and deal with their concerns about how the business relationships will be affected by the transaction.
Human Resources. A merger and acquisition lawyer can make sure the agreements adhere to any applicable employment, compensation, and benefits laws. They will handle how various aspects are treated, such as payouts, employee stock options, retention agreements, terminations, and consolidation of offices.
Negotiations. A large part of the merger and acquisitions lawyer’s role is negotiating all aspects of the agreement between the entities. This can include the sales price, terms and payments, and any of the other items on this list.
Due Diligence. One of the most important jobs of a merger and acquisition lawyer is conducting due diligence. Private companies are not under the same scrutiny as publicly held ones, so this means conducting an in-depth investigation into the other company to ensure that things are as they claim. They will study their financial statements and other corporate documents, and assess the company’s obligations, litigation risks, and potential growth, among other things. They will look for evidence of sandbagging and ensure that everyone is holding to the implied covenant of good faith and fair dealing.
Finding the Right Merger and Acquisition Lawyer
When a company embarks on a merger or acquisition, it will need representation who can ensure that they meet the intended goals of the transaction. The terms should be clear to all entities and result in a legally binding agreement and a smooth transition for all involved.
At Swiecicki & Muskett, LLC, you will find relevant legal expertise with the breadth of knowledge necessary for a purchase, sale, or consolidation of companies. The firm’s unique combination of practice areas brings more to the negotiating table than the typical corporate counsel. In fact, Christopher Swiecicki teaches Business Acquisitions (M&A) and Corporations as an adjunct professor at Washington University School of Law.
Find out how Swiecicki & Muskett, LLC can help you navigate your merger or acquisition.