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There are certain business terms that are essential for understanding how businesses operate – Mergers and Acquisitions is one of them. Mergers and Acquisitions (M&A) refers to various strategies in the business environment that enable the consolidation of companies into a single, larger entity. A merger typically occurs when two companies unite and merge into one, thereby enhancing their market position and operational capabilities. In contrast, an acquisition involves a company purchasing another company to expand its reach or resources. Interestingly, this process can be beneficial if a private company seeks to become a publicly traded company. In a "reverse takeover" private companies can become publicly traded companies without going through an initial public offering (IPO) when a private company's shareholder exchanges its shares in the private company for shares in the public company. Regardless of the structure, all these transactions are classified as M&A deals, underscoring their importance in corporate growth and strategy.

In general, there are five (5) major components to an M&A deal: Assessment & Preliminary review, Negotiations and Letter of Intent, Due Diligence and Negotiations, and closing.

• The Assessment & Preliminary Review- This is the starting point for a M&A deal which involves the Selling Company/Vendor to create an Informational Memorandum that contains enough information for an Acquiring Company/purchaser to have enough information to decide whether to pursue the company without giving away any confidential/sensitive business information. If the Purchaser(s) are interested in acquiring the said company, then the Purchaser(s) would be required to sign an 

• Negotiation and Letter of Intent- In this Phase we begin with essential negotiation matters such as: antitrust laws and determine whether the transaction necessitates pre-clearance from the Office for Competition, employment law considerations, licensing matters, fiscal implications. Typically, this negotiation phase is more in line with the preliminary view and specific aspects of a transaction. Once these are completed, a letter of intent is drawn up by the Attorney/ in-house counsel. 

• Due Diligence – During this phase, the potential purchaser does a thorough investigation of Target Company. Also, the target company/ vendor might do Due diligence of their own for various reasons that can include legal, Financial to determine potential risks of the sale. 

• Negotiation and Closing – Once the Due Diligence phase is done, Negotiations proceed and the purchaser will go over their analysis with its own advisors/board of Directors, Executives, Lawyers. If the purchaser is still interested the Buyer and Seller will come together and Formulate a Deal detailing the Terms and Conditions of the Sale. Some things to mention once all the details are formulated and the two parties have agreed to all terms, they will Sign a Shared Purchase Agreement (SPA) or an Assets Purchase Agreement (APA) . The Difference between the two are that in an SPA the purchaser promises to acquire all the shares of the company and with that takes all the assets and liabilities of the Acquiring Company. In an APA the buyer can specifically buy certain assets and avoid liabilities. Note that APAs are great for owners wanting to sell certain parts of their business. An Example of this would be Mark Cuban selling his majority shares of the Dallas Mavericks. 

• Post-Closure integration/implementation- Post-Closure implementation is the final part of the M&A process; this typically involves integrating new management. This might include a change of the Board of Directors, Executives, or even upper management. One thing to note is that often both companies will prepare to merge through exercises to get accustomed to the new work environment and leadership. Other things that might change are company technology, leadership hierarchy, workplace environment, goals, and other such processes. One final thing is that after closing typically both the buyer and seller sign ancillary contracts. Simply put they sign contracts determining what the buyer and seller can do after the sale has closed. This might include Escrow agreements, Restrictive Covenants, and Confidentiality. 

An M&A Lawyer is basically the Deal Maker and is the primary point of contact between the Buyer and Seller. M&A lawyers basically run the show and make sure the Deal goes through all the way to the end. Typically, M&A lawyers work for an outside firm or are in-house counsel. M&A lawyers have a lot of technical skills to work efficiently. Some of these skills include an extensive understanding of Corporate Finance, Secured Lending, Tax, employment and labor laws, among others. M&A lawyers’ majority of the time DO NOT get involved in post-closing/ post-integration or setting purchase prices. M&A lawyers do a lot throughout the entire process and are heavily dependent on them. Some core functions of what an M&A attorney does are the following:

• Preparing the target company for sale 

• drafting and negotiating a financial adviser engagement letter, a letter of intent and a confidentiality agreement

• Work with tax and financial advisers to structure the transaction

• conduct or facilitate legal due diligence 

• Prepare a due diligence memorandum or summary of due diligence findings for buyers or vendors

In summary, Mergers & Acquisitions refer to the buying/selling or merging of two companies/entities that will eventually consolidate into one post-closing phase. Mergers & Acquisitions is a very interesting field of work and how much information and skills needed to be an M&A attorney makes the job only for very experienced professionals. M&A lawyers must Negotiate, Due research, draft letters of intent, make sure their client gets the most for their company, and have qa uick turnaround to keep the company buyers or sellers entertained enough to close the deal. It’s important to note that the best M&A lawyers have a good knowledge of how corporate finance works and are tactful when it comes to negotiation. M&A lawyers are not like public defense attorneys, Criminal attorneys, and so on. Their Job is to make sure deals go through and make work with financial analysts, CFOs, CEOs, and other such players in the corporate world. 

Sources:

Book Recommendation 

• Mergers & Acquisitions from A to Z by Andrew Sherman