Mergers and Acquisitions
UNDERSTANDING MERGERS AND ACQUISITIONS
In order to remain relevant in the world of global corporations and changing markets, a business must also be willing to change or adapt. If you want to keep up with the competitive world of business, you may need to consider using acquisitions, mergers or sales to your advantage. Downsizing is not always negative, and growth can sometimes come in leaps and bounds.
Three primary means of altering your business are:
- Merger: Working closely with two or more independent business entities and deciding to form one business is the basis of a merger. All or all but one of the previous businesses will effectively cease to exist after a merger. Business contracts may refer to mergers as consolidations.
- Acquisition: Different from merging to gain mutual benefits, acquiring a business outright allows you to control it and collect its assets. You may either eliminate an acquired business, rebrand it or permit it to continue operations like normal, only now you have the final say in its actions and decisions.
- Sales: Selling your entire business, a subsidiary company or an arm of your company can be beneficial. You can exact high profits, remove government sanctions that affect only large corporations or even allow another party to take responsibility for a business that you may not have time to manage.
Deciding to partner up with another business is just as complicated as it sounds. Selling a portion of your company or a subsidiary entity is also notoriously intricate. If things go wrong or are not drafted accordingly the first time around, you might be inviting major problems into your business as well as federal investigators from the Federal Trade Commission (FTC).
Only through careful study and thorough understanding of business law and the life of a business itself can acquisitions, mergers and sales be properly used. After all, your business is as unique as you are, and it cannot be handled through premanufactured means or treated with cookie-cutter solutions.
Before you get too far ahead and risk signing something you should not, you should consult an experienced business law attorney to ensure you make the choice that will most benefit your business.
WHEN SHOULD A SELLER OF A BUSINESS INVOLVE AN ATTORNEY?
The answer is somewhat complex. As an attorney handling business sales, involvement varies based upon the preference of the seller. The Vaughn Law Offices has had occasions with involvement from the start, where we are able to (1) conduct an audit to make sure the business is on sound legal footing; (2) analyze and make recommendations regarding the business operations, management structure, employee contracts, etc.; and (3) assist with the appraisal, listing and marketing process. On other occasions, we are retained after a potential buyer is identified and participate in the negotiation of terms, preparation of the letter of intent, management of due diligence information exchanges, preparation of sales documents, and handling of closing. On occasion, an attorney is brought in late in the process, which is not recommended, to draft the key documents and oversee closing. This is not necessarily the best approach because when we advise a seller about the implications of the legal and tax issues, it sometimes leads the seller to want to restructure the nature of the deal in a more favorable manner, and the negotiations have to begin again.
Whatever our role, we work respectfully with the other professionals, including any accountant, financial planner, investment banker, business advisor, and business broker. We enjoy making sure that sellers are protected throughout as we accomplish a successful outcome.
PREPARATION IS KEY IN ALL MERGER AND ACQUISITION SITUATIONS
Success matters when contemplating a merger or acquisition, and the business attorneys at The Vaughn Law Offices have the necessary experience to help you achieve that success when navigating major change. We will provide the guidance to help you pursue a stable yet flexible future for your company with the confidence that you will not stumble across complexities that will impede your progress.
You want your business to succeed without losing its own identity and purpose. By committing ourselves to your vision of your company’s future, we will find the right path for you to follow to get you there.
Whatever your needs may be, we would be happy to discuss them during an initial consultation.
Since 2001, the attorneys at The Vaughn Law Offices have been providing legal assistance to businesses in the Denver area.
When success matters, contact us at 303-586.5905 and tell us what you need.
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