As a business owner in Chicago, you do all you can to help your business succeed. From putting in long hours to motivating employees, you have done and seen it all. So when a business merger, business sale, or business acquisition opportunity for your business arises, it is only reasonable that you should look into the offer — or pursue another company — if it’s right for your business.
As you dive into company mergers, sales, and acquisitions, though, you will see that there are many different types. You may even wonder what the difference between mergers and sales and acquisitions is. We are here to help.
At Bleakley Law LLC, we are committed to helping businesses in Chicago succeed. From handling M&A law to a whole gamut of other business law needs, you can count on us. In today’s blog, we’re going to answer five commonly asked questions about mergers and acquisitions. If you are either pursuing an M&A deal or are deciding how to respond to an M&A offer, meet with our merger and acquisitions lawyer. We have the experience and qualifications you can trust with something as serious as a business acquisition or company merger.
What is a merger?
Two similar-sized companies join and become one company.
First and foremost, let’s cover one of the questions we hear over and over again: “What is a merger?” As it says above, a merger takes place when two companies, which are around the same size, merge into one company. This may be done to reach more customers, become more competitive, or enhance the strength of the merged company.
What is an acquisition or sale?
A person or company takes over a business and becomes the new owner.
“What is an acquisition, then?” you ask. An acquisition involves one person or company acquiring another business and becoming the new owner. With a business acquisition, the person or company acquiring the other may do so through either a stock purchase or an asset purchase. For example, once the buyer — the Acquirer, let’s say — obtains more than 50 percent ownership in the Target company, then the Acquirer will effectively control the Target. This allows the Acquirer to make decisions regarding the Target’s business and assets.
A business sale works in the same manner as a business acquisition, but with the company owner selling the business. The difference is just which side of the transaction the owner on.
Does all of that clear up the difference between mergers and acquisitions? A merger is when two companies combine to form one new company. An acquisition is when one company acquires control of another company.
What are some reasons for pursuing M&A?
The benefits of mergers and acquisitions can be immense — rely on an M&A lawyer for help.
The big question as a business owner is usually “What’s in it for me?” Well, with an M&A deal, there can be quite a lot for you to tap into — if you have an experienced merger and acquisition lawyer on your side. Here are some of the reasons for a merger and acquisition:
- Retirement – Someone could wish to sell the company to someone else who will preserve its legacy right before the founder retires.
- Relocation – Someone could be relocating to another state or country and continuing to manage business operations would be too difficult or undesirable.
- Health or medical concerns – Someone could be facing difficult medical concerns and see value in selling the company.
- Personal financial needs – Someone may have a change in personal finances and think merging or selling the company is the best option.
- Increased business competition – Someone who is seeing increased competition could wish to sell the business to a competitor or to merge with a similarly sized company to beat out other competition.
- Desire to grow and expand – Someone could merge the company with another in an effort to have more services and assets for expansion.
- Desire for greater management and employee infrastructure – Someone could merge the company with another in order to achieve better management and greater benefits for employees.
- Compliance with a business succession plan – Someone could simply be following the predetermined succession plan for the business.
- Belief that the business has reached its potential – Someone could feel complete with what has already been achieved for the business and therefore be open to an M&A deal.
As you can see, there are many different, valid reasons for considering either a merger, sale, or an acquisition. An M&A deal has the potential to increase your customer reach, drive sales, and build brand recognition. As a business owner, it’s vital you do what’s right for both your business and your family. If one of the reasons listed above is relevant to you and your situation, contact Bleakley Law LLC for a mergers and acquisitions lawyer in Chicago who can help you know how to proceed.
What are different types of mergers and acquisitions?
There are three main types of M&A deals.
Each business, as you know, is incredibly unique — and so is each and every merger and acquisition. That being said, there are three main categories into which we classify mergers and acquisitions:
- Asset purchase transaction – In this M&A deal, the purchasing company only acquires specific assets of the selling company and does not assume any of the liabilities of the selling company. In this type of merger and acquisition, the selling company typically winds down its business and ultimately goes out of existence.
- Share purchase transaction – In this M&A deal, the selling company’s shareholders sell their shares of stock to the purchasing company. Unlike an asset purchase transaction, the selling company continues to exist — it simply does so with new owners.
- Merger transaction – In this M&A deal, it’s just like it sounds: two companies merge and become one. The assets and liabilities of both companies are combined into the surviving entity.
Not sure which M&A deal is best for you? You don’t have to be. An experienced merger and acquisition lawyer can help you determine what is right for your business and future.
How can a mergers and acquisitions lawyer help?
An M&A lawyer has the expertise and qualifications necessary to help you succeed.
When you work with a merger and acquisitions lawyer, you can expect to dive into merger and acquisition strategies, understand the merger and acquisition process, and ensure you are following M&A law.
A business merger is more than simply signing on the dotted line — you need an M&A lawyer to help you understand the process and proceed with an optimistic, realistic outlook for the future. Here at Bleakley Law LLC, our M&A law firm can help with a variety of merger and acquisition law services:
- Asset Purchase Agreements
- Share Purchase Agreements
- Joint Venture Agreements
- Buyout Agreements
- Business Broker and Investment Banker Agreements
- Letters of Intent
- Legal Due-Diligence Reviews
- Shareholder Approvals
- Corporate Resolutions
- Joint Ventures and Strategic Alliances
- Negotiating and Documenting Transactions
- Earnouts and Escrows
When you work with our mergers and acquisitions lawyer in Chicago, though, you can expect us to help with more than simply what is listed above. By working with company acquisitions and business mergers for so long, we have developed an intimate understanding of what influences people’s decisions.
As a result, we are able to anticipate risks before they develop into problems, inform you how your goals may be affected as a result, and help you plan for the changes.
Working with a mergers and acquisitions lawyer is vital because of the role the attorney will play in forms, specifics of the law, and more; however, you want a mergers and acquisitions lawyer who also understands the nuances, risks, and warning signs within M&A law.