Short Cuts: Term Sheet, LOI, MOU Due Diligence Company & Business Valuation
Definitive, Purchase & Sale Agreement Post Merger Integration
Board & Governance Approaching Deal Targets
Mergers and acquisitions (M&A) are transactions in which one business buys another in such a way that either a full transfer occurs or they are combined. M&A provides enterprises with an alternative way to grow or divest itself of no performing businesses. For individuals (such as entrepreneurs) or shareholders, it provides an avenue to sell their holdings. For firms seeking to grow through M&A, they also use it as an opportunity to improve their competitive position.
From a legal point of view, a merger is a legal consolidation of two entities into one entity, whereas an acquisition occurs when one entity takes ownership of another entity’s stock, equity interests or assets. From a commercial and economic point of view, both types of transactions generally result in the consolidation of assets and liabilities under one entity, and the distinction between a “merger” and an “acquisition” is less clear. A transaction legally structured as an acquisition may have the effect of placing one party’s business under the indirect ownership of the other party’s shareholders, while a transaction legally structured as a merger may give each party’s shareholders partial ownership and control of the combined enterprise. A deal may be euphemistically called a “merger of equals” if both CEOs agree that joining together is in the best interest of both of their companies, while when the deal is unfriendly (that is, when the management of the target company opposes the deal) it may be regarded as an “acquisition”.
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Unlike the M&A deal, one company is not buying another. Instead they are partners, usually in a new entity. If no new entity is used for the partnering arrangement, the coming together is more commonly called a strategic alliance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging markets; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.
Deal Documents
To effectively complete the M&A deal, Joint Venture, or Strategic Alliance, please click below to get the various documents required:
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| Term Sheet | Due Diligence | Company Valuation | Definitive Agreement |
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| Post Merger Integration | Governance & Board | Approach Targets |
