One of the most important processes that a business can undertake is a merger and acquisition. For the companies that will be involved in the process, they can expect a win-win situation. For the business that will be merged and acquired, they can ensure the continuity of their business as a part of another company. For the acquiring company, it is the perfect opportunity to grow their company.
According to the website of Slater Pugh LLP, mergers and acquisitions are important business decisions that should be carefully considered. M & A’s are governed by different areas of law. This is important because it can affect the employees of the company. For both seller and buyer, such transactions would mean change in corporate control. Mergers and acquisitions could affect shareholders, customers, employees, and vendors.
Among the two transactions, the more common is acquisition. This involves a smaller company being bought by a larger one. Depending on the agreement, the cost of acquisition could be in the form of stocks or cash. These transactions are governed by corporate law which provides information on requirements necessary to complete the merger or acquisition. Likewise, mergers and acquisitions identify the different duties that the Board of Directors will have in the new company.
Before the merger and acquisition deal can be implemented, it would require the vote of the different shareholders. In a stock deal, shareholders need not vote because each director will decide if they want to sell their shares to the new owners. The company charter may also have a set voting requirement when the company is up for sale. In some instances, the company may also have the option to solicit proxies from shareholders.
Taxation issues also play a huge factor in mergers and acquisitions. The Internal Revenue Code of the United States discusses all of the taxation issues. Tax lawyers need to be involved in every step of the way of mergers and acquisitions.