Mergers and Acquisitions
Successful Mergers and Acquisitions (M&A) transactions rely on advanced preparation. M&A transactions are often stressful and time-consuming for any company and the management team. While this is true, there are several things businesses can do to maximize the likelihood of a successful process.
During any talks with a potential buyer, the selling company needs to insist that the proper NDA (non-disclosure agreement) is signed early . Also, the NDA should work to provide a non-solicitation provision for employees.
It’s smart for a business to hire an investment banker to help with the M&A process. An investment banker is helpful for finding potential buyers and serving as an intermediary during negotiations.
Be sure the banker provides a list of the most likely buyers. It should include annotations related to the relationships they have with specific buyers. It’s also necessary to scrutinize the standard form of engagement letter. Usually, these are favorable to the banker, but they can be negotiated.
When selling a company, it is crucial that quality and experienced mergers and acquisitions counsel is hired. The lawyer that is chosen for the job needs to be a full-time M&A lawyer. The existing counsel the company has may not be right for an M&A transaction.
Negotiating Mergers and Acquisitions
In order to negotiate the terms of the M&A, it’s best to have someone other than the CEO. A potential conflict of interest may exist. It’s best to have the established M&A Committee of the Board handle the process. In an ideal situation, the process will run as an auction to help increase the possibility of improved prices and terms. From the perspective of the seller, it is smart for the initial merger agreement to be created by the counsel of the seller.
The Letter of Intent
The buyer will usually want to secure a deal with a letter of intent that includes an exclusivity period that lasts for 30 to 60 days.
The terms need to be extremely detailed and set forth in this letter and the period of exclusivity is short, so it is in seller’s best interest
With an M&A process, there is no question that this can be confusing and time-consuming. Being informed and knowing how to make the process easier is essential. Keep the tips here in mind to achieve the desired results.