Merger and Acquisition (M&A) activities involve the consolidation of companies or assets through various financial transactions. The process of M&A can be complex and requires careful planning, execution, and legal expertise. Choosing the right corporate attorney is crucial for the success of any M&A deal. Advocate Saravvanan Rajendran Law Chamber is a renowned law firm specializing in corporate law, including M&A transactions. In this article, we will discuss how to choose the best corporate attorney in Advocate Saravvanan Rajendran Law Chamber for your M&A needs.
ADVOCATES FOR MERGER AND ACQUISITION PROCESS
Corporate Advocates play huge role in the event of mergers and acquisitions. The traditional role of attorneys in the process is about giving legal advice. Advocate Saravvanan Rajendran Law Chambers offer the best legal Services for Merger and Acquisition in Chennai, Tamil Nadu, India.
Merger of companies
The Amalgamation of two distinct companies involves many legal technicalities. In involves a detailed review to close a deal. Mergers and acquisition – M&A are two separate business deals. They both result in linking two companies.
They join two companies into one. Amalgamation or business acquisition is a mega event for any company. It has major implications for the stakeholders of both companies. Stakeholders can also be owners, employees, or customers too.
The early stages of a merger or business acquisition need legal help. For Ex. -You are a seller in Amalgamation or acquisition. A business broker agreement done by an attorney will set forth sole work terms.
Our lawyers have great promise. They help out in the evaluation, structuring, and execution of business Amalgamation or acquisition. We help you find the resource of M & A deal.
Corporate attorneys for M&A
It is the best critical decision to hire an attorney. Your Corporate attorney must cover all the legal bases. Lawyers play a typical role in drafting legal documents. It can be an intent letter, an acquisition agreement, and so on. They even draft employment contracts to keep the company’s key employees after closing the deal. Lawyers take care of due diligence and negotiations. They are the right persons to answer all your legal queries about M&A.
Find the best corporate advocates for the merger and acquisition process
Corporate Advocates guide you via deal structure. With their aid, you can structure the deal to your tax benefits & legal purposes. A typical intent letter needs to have details about stock and asset buy-outs or Amalgamations. So do not wait to engage our legal folks to take up the M&A process.
Advocates are important in linking a deal. Do not think twice to hire them. Corporate Lawyers have skillful training to do M&A deals. They can identify and cut risk at the budding level. Lawyers help acquirer to lead and assess a deal from business aspect.
Operation of M&A
Basically, the operation of M&A is defined as when two companies together, either by resulting in a new firm or by one controlled by the other. Ex-form merger company is known as concentration and defined as A + B = C and the latter is known as incorporation and represented by A + B = A. Another important issue is related to the nature of the business activities or markets in which they operate. A process of merging companies is a strategy of diversification of business and can be of three forms.
Vertical diversification occurs when two or more companies in various stages of the value chain are amalgamated into the same company. Horizontal diversification is present while the amalgamation occurs among firms operating in various business (eg Virgin). Finally, geographical diversification happens when firms expand their territorial control by merging or acquiring companies operating in different geographical locations.
There are a large number of examples of mergers and acquisitions. Although only one involving higher amounts of money becomes known to the public. And so widely used that there is also a large number of academic literature devoted to the study of the phenomenon.
What is a Merger?
A merger takes place when two or more firms come together to form a new single company. There are five types of Mergers –
- Vertical mergers
- Horizontal mergers
- Product extension mergers
- Market extension mergers and
- Conglomerate merger.
In a merger of equal firms, there will no acquisition company. The merged company can have equal board representation in the new board. Shareholders surrender their old shares in return for the shares of the new company.
The Amalgamation of equals is a rare scenario. Under usual circumstances, one company will be acquiring another. Acquiring Co. may be calling it a merger instead of an acquisition due to varied reasons. Marketing tactics, management, or employees are some of the reasons for the same.
What is an Acquisition?
In acquisition, one company-the acquirer purchases another company-target co. Acquisitions can happen through the buying of stocks or equities of Target Co. by acquiring the company. Meanwhile, It could also be buying out of all or part of the assets of the target company.
Acquisition through buying stocks:-
The acquirer buys shares of Target Co. from shareholders. This results in the acquirer taking over the assets and liabilities of the target company. Many legal complexities are there in acquisition through buying its stock. Moreover, it depends on the number of shareholders of the target company to make such a move.
Acquisition through buying of assets:-
The acquirer buys part or all the assets of Target Company. The assets can be stock, facilities, vehicles, or equipment. It is not necessary for the acquirer to buy all assets of the target co. They have the choice of selecting assets and liabilities. This is the main advantage of asset-purchase compared to stock-purchase acquisition.
Our experienced M&A advocates can guide through the process. We handle M&A through effective and efficient methods. M&A transaction of a company are complex in nature. They need strategic business planning and due diligence in the same way. An experienced advocate in the area is the right choice.
What is a vertical merger?
What is a vertical merger? It is when one business merges with another in its vertical supply chain. For example, a cranberry farmer who buys or combined with the bottling operation is vertically merging; a shoe-making business that buys a shoe repair business; an automotive company that buys a car alarm company; etc. These are all kinds of vertical mergers.
A vertical merger can be a very effective way to grow your business quickly, reducing costs and time to market through synergies, and improve efficiency.
What is a Horizontal Merger? – An Amalgamation of companies called a horizontal merger occurs when an agreement between two or more companies dealing in the same line of activity. The motive behind such Amalgamations can be elimination or reduction in competition, ending the price slashing, economies of scale in production, research and development, marketing, etc.
What are Conglomerate Mergers? – A merger called a conglomerate merger when a company founded on one type of industry merge with other companies in other unrelated industries. Motifs can be diversified.
So, this is a basic introductory knowledge of M&A. Now what lasting effect on the stock market and the values of Stock (participating companies) as a joint venture with another company?
The first advantage is that a post-merger company, becoming larger in size tend to finance salary increases in the cost level / lower then the situation prior to the Amalgamation. The reason behind this is that investors consider them a guaranteed fund, minimizing the financial risks involved.
Thus, the final effect is that the value of the stock rises after the Amalgamation. Now, the company merged to become more powerful and promising as it has a positive aspect of the two (or more) companies and restore confidence. As a result of the increase in demand for the shares.
What is the difference between mergers and acquisitions?
What is the difference between mergers and acquisitions? A merger is usually a joint decision between two companies to align together to become a stronger company. An acquisition is when one company buys out another company. Both of these events will face challenges and opportunities.
An Amalgamation is often regarded as a defensive strategy (eg, protecting position and market share) and the acquisition is often regarded as an offensive strategy (for example, taking the competitors).
Legal fees of merger or acquisitions
Some of the challenges business faces as hard as either a merger vertical, horizontal mergers, or acquisitions are dealing with fitting two cultures into one cohesive group, change management, re-deploying staff and lay-offs, accelerate production efficiency, reduce costs, dealing with duplication of product, brand identity, reaction customers, and more.
You need to weigh the pros of rapid growth, cost reduction, and/or improved services with the cons of change management costs, impact on the brand and/or impact on customers; other than the dollar cost (including legal fees) of merger or acquisitions for the company.
It is a good idea for solving techniques (such as Pareto analysis) to revisit the issue of the use of your decision to proceed with the merger.
When should you consider a vertical merger, a horizontal merger or an acquisition?
When should you consider a vertical merger, a horizontal merger or an acquisition? You may want to add new products or services quickly and your business aims to have a very good track record with the development of new products – or they may have a similar product that they’ve just launched.
Expand the Business geography
You might want to expand the geography, and the business you want to join a number of branches in the location you want. Your business and the target business may have the same customer.
Target business may have entered a new market you’re interested in the target business is one of only a handful of niche suppliers of key ingredients necessary for your business -. By combining with a company you can have better access to material, possibly with a better cost.
Legal Considerations in M&A
M&A transaction involves various legal aspects. The following are some of the most important matters that need the skills of an advocate.
What happens in the stock market?
Investing in the stock market involves a very high amount of risk, the values of the shares depend on many factors such as government policies, natural disasters, quarterly results of companies, balance sheets, etc. One such factor is the company’s Mergers and Acquisitions. What happens in the stock market when one joins another, we will discuss it here. Let’s start with an understanding of mergers and acquisitions.
New products to expand or enlarge the production capacity
There is a common motif for each enterprise and it is to maximize profits and minimize losses. To achieve this goal the company made a lot of strategies and do a lot of planning. One such strategy is to offer new products to expand or enlarge the production capacity. Or companies can also grow externally by acquiring existing businesses, and this is called Merger, Acquisition, Merger, Takeover, Absorption, Consolidated, etc.
Company’s plans for growth
When the company’s plans for growth internally have the advantage of choosing the equipment, technology, location, etc. according to their own decisions. And disadvantages of choosing internal growth are a longer implementation period, greater uncertainty, lack of funds, etc.
However, choosing the path of external growth that merger and acquisition strategy is also not so easy because first of all, all the costs and the benefits accrued are not counted and secondly, there is a lot of accounting, tax, and legal issues are more complex then acquired the machine.
This is the inherent desire and requirement of every business to develop both vertically as well as horizontally. Organic growth, ie the development of deep, often slow, and sometimes difficult. That is why there is an increasing trend towards mergers and acquisitions. It could be called an instant expansion.
Potential target for a merger or acquisition
Many large companies are constantly on the lookout for a potential target for a merger or acquisition. Some even have a cell nucleus or senior people concentrate on this aspect. Depending on the company policy, which may diversify or expand in the same field, add complementary business activities, or strengthen research facilities, they constantly scan the business world. Usually, they report directly to the decision-making authority.
Financial analysis, projections, and valuations in M&A
Sophisticated but simple-to-use software that can handle financial analysis, projections, valuations, and so on is available to help them. Quite often, the help of analysts, investment bankers, and lawyers who specialize in the field is sought. In fact, the professionals tend to have their own businesses they are frequently updated lists ready for takeover.
Sometimes the services of an investigator are used to gather intelligence on the background and personal details of the promoters and senior executives of the target company.
Once the victim is identified, the next step is to decide if a negotiated settlement is possible. The alternative is a hostile takeover in which the acquired company shares be purchased discreetly through a third party. Investment bankers and other professionals play an important role in both of these methods. This process is managed in secret.
Sometimes there is a reverse situation. An employer may want to get out of the field for any reason. Ideal for this step she would contact an investment banker or consultant who can find a buyer. Usually, all mergers and acquisitions move kept secret until an agreement is reached.
Both selling & buying Co. in an acquisition or merger needs due diligence. The target company has to conduct due diligence. It is necessary to assess the greatest worth of the company. By the way, It helps the target company to close a deal in the most profitable manner. The seller has to be ready with complete documentation.
The acquisition company conducts reviews and assesses these documents and closes the deal. Due diligence enables acquiring the company to identify any risks involved. A due diligence lawyer is a right person to handle this step.
It is a part of the due diligence process. The target company has to open all its important documents for analysis & assessment.
The lawyer may investigate incorporation documents, past meeting minutes, bylaws. Without a doubt, It can be any other related material.
Corporate governance also includes analysis of bank accounts, corporate conduct, and organizational charts. Complete on-time disclosure helps to close the deal much earlier without hassles.
Big mergers / Acquisitions involve provisions of workings during the potential antitrust review. Most of all, Sellers need assurance the deal will close regardless of time. But acquisition companies need the option to walk out if they feel the deal is no longer consistent.
Our M&A lawyers can help with antitrust related provisions. Moreover, They can prevent a deal from falling apart through negotiations.
All entities involved in M&A transactions have significant tax implications. In fact, Tax lawyers work with the structuring of transactions to enable entities to enjoy tax benefits. Of course, They help them avoid unnecessary tax loads.
Hiring a lawyer or Law Firm for a merger or acquisition
There are some legal complications involved in mergers and acquisitions. It is advisable to hire a lawyer for a merger or acquisition. Legally binding contracts and agreements have a lot of terminologies that people may not understand. Lawyers have the necessary knowledge to help people understand their rights in relation to a merger or acquisition. This can save a lot of time and legal complications.
Lawyers are in a better position to evaluate the agreement and recommend whether certain mergers or acquisitions are best suited to the needs of clients.
Profile of M&A Lawyers
To find a lawyer who is experienced and well-known for mergers and acquisitions, the need to do some comparison work. They can research online and ask friends for advice or find another lawyer who specializes in mergers and acquisitions. Profile of lawyers to be employed to give the client a fair idea about the experience in the field of mergers and acquisitions. Some companies specialize in the area. It is advisable to hire from these companies.
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Top M&A advocates in Chennai
We would like to give few extra points. It is important you hire an advocate who have Top skills in handling M&A process. It is not a good advice to hire a guy who is just because he is an attorney. In the same way that you wouldn’t go to a dentist for a heart ailment, for instance, It is like hiring a real estate lawyer for M&A.
Contact Advocate Saravvanan Rajendran Law Associates in Chennai for the Merger and Acquisition process.