Mergers & acquisitions

Mergers & Acquisitions

MERGERS, ACQUISITIONS AND DOWNSIZING

In order to expand business operations, grow a company, or survive as a company in a tough economic climate, mergers and acquisitions present a strategic business partnership that can occur through different processes. When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's ownership can continue to be sold or traded. In the pure sense of the term, a merger happens when two entities, often of about the same size (but not always), agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks or ownership method are surrendered and new company stock or ownership method is issued in its place.

Synergy is a major force that allows for enhanced cost efficiencies of the new business, and as an outcome of a merger or acquisition staff reductions, economics of scale, acquiring new technology, and more are all downsizing opportunities that can result from these transactions. Fantetti Legal provides legal and business guidance to client’s about these matters because they are important consequence of buying and selling companies.

BUYING & SELLING ENTITIES

Purchasing and selling a company can be a short or long process, depending on the company and industry involved in the transaction. A buy/sell transaction can involve purchasing an entire company (ownership and assets) or purchasing either the assets or simply the ownership interests or stock of a company. A buy-sell agreement is the major document controlling the consummation of the sale and reflecting the necessary terms that each party agreed to ahead of time to be bound.