Let’s Look at Mergers-Acquisitions
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When it comes to mergers and acquisitions, also known as M&A, there can be unparalleled benefits for all parties involved. However, many people may not know what exactly M&As are. It is important for business owners and other executives to take the time to learn more about mergers and acquisitions. This will ensure that all legal aspects are taken into account.
This is also where the advice and guidance of Illinois business attorneys can be invaluable. Oftentimes, businesses feel that the entire process of M&A can be handled in-house. However, that may come with its own complications down the road. Fortunately, the team of professionals at Anthony J. Madonia & Associates Ltd. is here to ensure you have the information you need to make the right choice for your business.
What Are Mergers and Acquisitions?
The term refers to the consolidation of companies or their assets through financial transactions between companies. This is a vital part of any growing company and, depending on the exact situation at hand, may be handled internally or with the help of a business or corporate attorney. Though not uncommon for the words “mergers” and “acquisitions” to be used interchangeably, they actually refer to two different events.
An acquisition is when one company purchases another and takes over as the new owner. Conversely, a merger is when two companies of approximately equal size join forces as a single entity for the benefit of both companies.
Common Legal Issues with Mergers and Acquisitions
Combining multiple companies into a single organization can be a complex process. There are a number of things to consider ensuring that the personnel, structure, operations, and other vital parts of each business work together in a way that is both beneficial and profitable. In addition, not having Illinois business attorneys on hand for these processes can lead to legal ramifications.
Preliminary Negotiations and Letters of Intent
It is vital to reach a preliminary understanding of key business issues before moving forward with M&A. This is typically done in the form of a written summary of the key points in a letter of intent. This document does not usually bind the parties to the deal. It does lay out the parameters of the transaction. Failure to raise issues at this stage may cause serious issues when it comes to finalizing the transaction.
Due Diligence
Each company is subject to a complete review of its records, assets, finances, debts, and other information. By gathering this information, stakeholders can ensure that there are no unexpected surprises. We want to avoid surprises during the process. This allows them to plan a successful business strategy.
Contract Review and Renegotiation
It is crucial that a legal team reviews all existing contracts for each company in an acquisition or merger. This way you can learn how they will apply to the new company and what rights and obligations are involved. It is not uncommon for contracts to require renegotiation to ensure that the new company has all of the proper protection and benefits.
Tax Considerations
It should be no surprise that the timing of M&A can dramatically affects how taxes apply to the sale. To ensure that tax burdens are minimized, it is highly recommended that a company works to fully understand how taxes will apply and plan the most beneficial strategy for their taxes.
Let Our Business Attorneys in Chicago, IL, Help in Your Merger and Acquisition
Our Illinois business attorneys at Anthony J. Madonia & Associates Ltd. have been serving businesses since 1995. Our approach to every business need is a straightforward one. We strive to do the right thing for the right reason in the right manner by delivering solid legal and business counsel. If you need help with mergers and acquisitions, contact us today at (312) 578-9300.