Houston Real Estate and Business Law Firm

Mergers & Acquisitions

Mergers and Acquisitions Attorney Serving Houston, Texas

Mergers and acquisitions are business methods that are utilized to grow a company. Firms, in a sense, form alliances with other businesses to profit financially. When companies aim to expand their market, they frequently start with mergers and acquisitions. Companies can use this to break into a new market segment. They could buy, combine with, or form a joint venture with a firm specializing in the field they wish to get involved in. Our mergers and acquisitions attorney can guide you through this nitty-bitty process.

Perhaps you recently learned that another business entity is buying your company. It might mean you've lost your work title, your income may have been reduced, or your benefits may also have been modified.

If you suspect that the corporate merger you are in the midst of is unfairly affecting you, a business lawyer may be able to assist you. Mergers and acquisitions don't always work out the way they're supposed to. Indeed, they frequently fail. If you feel a merger or acquisition has harmed you or your company, you have the right to talk with a GK Law mergers and acquisitions attorney right away.

GK Law has helped hundreds of clients with their business law, property law, and condemnation law concerns. We can help you, too!

What are Mergers and Acquisitions?

mergers and acquisitions

Mergers and acquisitions have traditionally been an essential strategy for long-term corporate expansion and consolidation.
Mergers and acquisitions involve complicated operations such as

  • Purchasing
  • Selling
  • Merging
  • Divestitures

It can significantly alter the dynamics of a company or the industry in which it operates.

"Mergers and acquisitions" refers to combining two or more firms or assets. Although some people use the terms interchangeably, there are significant distinctions between the two.

Merger

When one company effectively absorbs another, it is called a merger. Although the absorbed company will cease to exist as a separate legal entity, some aspects of the absorbed business may continue to operate as part of the combined company. How a merger impacts a firm is determined by how it is classed and managed legally.

The most prevalent type of merger is a "statutory merger." The merging process is controlled by state legislation. A statutory merger can take the form of complete absorption of one firm into the other, or it can take the form of a "combination," in which the businesses are joined to form a new corporation, with both current companies ceasing to exist.

Acquisition

An acquisition occurs when one firm buys the ownership holdings (or a majority stake), yet both companies keep their legal identities. It frequently involves a target business's shares and assets, permitting the acquiring corporation to make decisions without seeking shareholder approval. Think about the following scenarios:

  • Company A buys all of Company B's assets, either in cash or through issuing shares. Company B would then continue to operate as a legal entity, but the company would dissolve and transfer money or shares to stakeholders in most situations.
  • Company A buys a controlling stake in Company B's shares. Company B would become a subsidiary of Company A and continue operating normally. In this circumstance, Company B would have the option of being liquidated and amalgamated into Company A.

Mergers and acquisitions are similar in many respects, yet each has its own rules and regulations.
A seasoned mergers and acquisitions attorney can help you understand this legal set of rules and regulations.

What Are the Stages of Mergers and Acquisitions?

Although no two Mergers and Acquisitions transactions are alike, there are several typical stages that many transactions go through:

Due Diligence

The buyer's financial and legal consultants go over all of the economic and legal aspects of the target firm or assets that they will buy. The goal of the due diligence process is to find any potential financial or legal issues that might hinder the deal. The due diligence results will serve as the primary source for drafting the contract.

The Contract

The legal advisors of the parties involved draft and negotiate a contract that divides the risks between the buyer and the seller based on the results of the due diligence process. The contract may be in the form of a stock purchase agreement or an asset acquisition agreement, among other things.

The Closing

The contract lays out in full the steps that both the buyer and the seller must do to complete the transaction. Because of the different aspects of each transaction, each closing is unique. Some closures, for example, may need the approval of a governmental entity. Other closings may be solely dependent on the activities of each party (i.e., payment of the purchase price, delivery of stock certificates, etc.).

Post-Closing

Even though the transaction has been completed, the parties may be subject to post-closing responsibilities or actions, such as non-compete or non-solicitation agreements. On the other hand, some mergers and acquisitions may not have post-closing duties.

What Are the Tax and Non-Tax Considerations on Business Acquisition?

Aside from the apparent amount and payment conditions of the purchase price, several non-tax issues are routinely addressed and agreed upon by the buyer and seller when negotiating the acquisition or sale of a firm. Examples of such matters include:

  • Whether or not the buyer will be required to provide any personal guarantees if the seller finances all or part of the purchase price
  • Whether or not the seller will utilize any assets of the acquired firm or other buyer assets as security in the case of seller financing
  • The substance of warranties and representations, the consequences of any breach of warranty or representation, including whether a right of offset will be awarded
  • Provisions for confidentiality
  • The inclusion or exclusion of a deal-breakup charge
  • Whether or not legal advice will be necessary
  • The arrangement of delayed payment conditions for the seller, including the terms of any "earn-out" clause
  • Until the sale is completed, the seller is bound by certain limitations.
  • The duration of a warranty or representation's surviving term
  • The particular conditions of any employment or consultancy arrangement for the seller's continued engagement after closure
  • Restriction of competition clauses and non-solicitation clauses are examples of restrictive covenants.
  • The indemnification "basket" and "ceiling" amounts to the failure of the seller's promises and representations.

A skilled and qualified mergers and acquisitions attorney from GK Law can assist clients in obtaining more advantageous terms and circumstances in connection with the plethora of business points and concerns that come up in every significant business sale or purchase.

You should thoroughly study the tax consequences of the proposed business purchase.

To avoid a double tax, sellers incorporated as C companies frequently require particular structuring of the selling transaction. Under the right circumstances, allocating a portion of the purchase price to the seller's proprietors' goodwill may solve or mitigate a double taxation problem.

How Can a Mergers and Acquisitions Attorney From Texas Help Me?

A successful sale, merger, or acquisition requires meticulous planning. Our experienced mergers and acquisitions attorney's function is to assist in the planning phase by producing a working checklist that will serve as a guide throughout the transaction.

Letter of Intent

A letter of intent (LOI) between the buyer and seller is required before buying or selling a business, and one of the first questions on the LOI is whether they will sell the business entity or its assets.

Tax Implications

Each method has its own set of tax implications. Organizing vital company information for due diligence, such as payroll records and financial statements, is crucial to fostering confidence, saving time, and lowering costs for all parties involved.

Our mergers and acquisitions attorney will propose extensive due diligence if our client is the buyer, and we expect our client to participate actively in the process. We will negotiate a stock purchase agreement, asset acquisition agreement, or merger agreement concurrently with due diligence.

Because the statements, warranties, and disclosures in these agreements require careful attention from all parties to the transaction, this is a time-consuming and patient procedure.

Hands-on Legal Assistance

Finally, our mergers and acquisitions attorney will handle the sale, merger, or acquisition closure, including preparing and filing the relevant documents with the Texas Secretary of State and assisting with asset transfers and ownership interests.

We Can Provide Legal Counsel for Your Every Business Transaction

For years, our mergers and acquisitions attorney at GK Law has assisted businesses throughout Texas in completing mergers and acquisitions, forming joint ventures, and navigating other high-stakes deals.

GK Law has mediated the purchase and sale of enterprises ranging from hospitals and medical practices to software firms, oil and gas ventures, manufacturers, distributors, industrial equipment, vineyards, etc. We are recognized as industry leaders in business law.

While there are significant potential gains from a successful merger and acquisition, there are also significant dangers. Working with an experienced mergers and acquisitions attorney is critical for navigating hurdles, protecting your company's interests, and laying a foundation that facilitates growth and future success.

Need Help From a Business Attorney?

Transactions are subject to various legal and regulatory issues and the need to define roles and responsibilities clearly. Get in touch with our team of competent legal professionals at GK Law today, and have confidence that your business transaction will go smoothly!

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