Mergers and acquisitions can make or break a business. The decision to acquire another company or combine operations can provide access to intellectual property and talent as well as modern facilities. However, major business transactions come with a lot of risk, especially when they are not ultimately successful.
Executives at organizations preparing for mergers or acquisitions often contemplate bringing in legal assistance. The sooner in the process a business preparing for a merger or acquisition secures appropriate legal guidance, the better their chances of successfully navigating the transaction. The following are some of the top reasons that legal support is so important when preparing for mergers or acquisitions.
Outsourcing the due diligence process
Factors ranging from financial obligations to potential liability for worker lawsuits can undermine the benefits of a merger or acquisition. Due diligence is a crucial element of any large business transaction, and the leadership at the organizations involved may not be neutral enough to perform that process appropriately.
By partnering with a lawyer, executives and business owners improve their chances of identifying issues with the other company that could cause legal and financial challenges in the future. They can also potentially spot legal obstacles that could arise during or just after the transaction.
Managing the offer process
Negotiating a merger or acquisition can be a lengthy process that involves offers followed by counter-offers. Attempting to navigate the offer and negotiation process alone might mean that the leadership of the organization must dedicate hours every week to communications with professionals at the other business.
By partnering with an attorney familiar with mergers and acquisitions, they can outsource that work to someone capable of drafting a binding contract and properly negotiating. This process could easily include arranging for certain guarantees and indemnity for issues identified during the due diligence stage.
Helping establish workable policies
A business acquiring another company or merging with another business may have to make major adjustments to how it currently operates. Those changes can include preparing for downsizing and possibly also coordinating the integration of the two company cultures.
A lawyer can help determine what types of legal exposure the company may have after a merger and acquisition and can help establish company policies that minimize the risk of litigation or accusations of the company violating the rights of workers in the future.
The sooner that leadership at businesses preparing for mergers and acquisitions bring in outside support, the less likely they are to waste resources and time preparing for transactions that may not succeed or that may prove more damaging than beneficial. Bringing in lawyers who have experience working with mergers and acquisitions can set a company up for a successful transaction.