Planning a Merger? Here’s Why You Need a Mergers and Acquisitions Attorney
In recent years, the value of US-based mergers is in the trillions of dollars. Needless to say, the legalities are complex when that kind of money is on the table.
If you’re considering a big merger with another corporation, you want help from a solid mergers and acquisitions attorney. Keep reading and we cover just some of the ways they’ll assist you.
1. Manage the Paperwork
A merger will generate reams of legal paperwork. The last thing you need is a holdup because a document wasn’t formatted correctly or it never got signed.
An M&A attorney or firm handles all of the legal paperwork for you. They make sure everything gets formatted properly and, if necessary, submitted to the right agencies.
2. Negotiate the New Business Structure
When two companies merge, their old business structures evaporate. The new company must establish a new legal structure, such as LLC, S corporation, C corporation, or general partnership.
While you should offer input into the decision, the merger and acquisitions lawyers on both sides can hammer out the fine details. That leaves you free to plan a long-term corporate strategy.
3. Represent You if the Government Objects
Around 95% of all proposed mergers that warrant government scrutiny get approval. The government primarily concerns itself with preventing monopolies and other mergers that threaten competition in the marketplace.
So let’s say that you run the biggest textile manufacturing company in the Southwest. You propose a merger with the biggest textile manufacturing corporation in the Pacific Northwest. The government might object that the merger would give you too much control over the domestic textile market.
Your mergers and acquisitions attorney can make the case to the investigators about why the merger won’t harm competition.
4. Manage the Tax Implications
The transition of stock or assets can create a number of tax implications, some good and some bad. Occasionally, a merger qualifies as a tax-free merger.
As a general rule, though, your merger must function as a fully-fledged reorganization that combines all the assets of both companies. Otherwise, tax-free status is off the table.
A good M&A attorney will work with a tax lawyer to structure the deal in a way that limits your tax liabilities. While you may still end up paying taxes, you’ll probably pay less of them in the long term.
5. Employee Retention Negotiations
While C-Suite bloodletting happens occasionally right after a merger, it’s not the usual procedure. In most cases, you want those executives to stay on in some capacity for a time.
Your attorney can help negotiate how long they will stay. The attorneys will also negotiate the terms of any non-competition agreements you impose on executives that leave the company.
Parting Thoughts on Why You Need a Mergers and Acquisitions Attorney
Mergers often create complex legal and tax implications. A mergers and acquisition attorney can help you manage those complexities.
They’ll negotiate the new business structure and the merger plan to limit tax liabilities. They’ll also negotiate the terms of executive departure agreements.
They’ll deal with the legal paperwork to make sure it’s right. Your M&A arrtorney can even represent your deal if the government objects.
Manfred Sternberg and Associates is a Huston-based law firm that provides M&A legal services. For more information or to secure our services, contact us today.