Mergers & Acquisitions: How Corporate Solicitors Help Businesses Navigate the Process
Mergers and acquisitions can either propel companies to new heights or lead them astray. Tens of thousands of mergers and acquisitions (M&A) are announced each year; PWC reports the volume of deals over $1 billion in value rose by 17% in 2024. Corporate solicitors can help improve the chances of success.
The M&A landscape
The global M&A market remains strong despite economic challenges. Companies pursue M&A for various reasons: reducing competition, entering new markets, acquiring technology, achieving economies of scale, or diversifying product offerings. These goals come with significant legal complexities. Even experienced business leaders need legal guidance to navigate the process.
Due diligence and risk assessment
The M&A process begins with thorough due diligence, making it important to find a corporate solicitor who can manage the process meticulously. A legal expert can examine the target company’s financial statements, contracts, intellectual property (IP), regulatory compliance, employment matters, and any pending litigation. A committed corporate solicitor can identify problems and offer practical solutions. For example, they might discover environmental liabilities and negotiate specific indemnities or price adjustments rather than recommending deal termination. These professionals can help businesses overcome any legal hurdles and complete a deal.
Structuring the transaction
The optimal deal structure (merger, asset purchase, or stock acquisition) depends on a few factors: tax implications, liability concerns, regulatory requirements, and business continuity needs. Corporate solicitors create structures that optimise tax positions and protect clients from unnecessary liabilities. They might suggest a stock transaction to maintain contracts that would otherwise terminate during an asset sale, for example. The structure must satisfy shareholders, tax authorities, regulators, and potentially competitors who may challenge the deal on antitrust grounds.
Negotiating terms
During negotiations, corporate solicitors draft and negotiate term sheets, letters of intent, confidentiality agreements, and definitive transaction documents. Each provision requires careful consideration. As well as price, solicitors also focus on representations and warranties, indemnification provisions, closing conditions, and post-closing covenants. They can anticipate scenarios that businesses may otherwise overlook: key customer departures, intellectual property claims, or overly optimistic projections.
Regulatory approval and compliance
Major M&A transactions often require regulatory approval. Antitrust authorities review deals and industry-specific regulators verify that the combined entity will meet requirements. Foreign investment review boards examine cross-border transactions.
Solicitors can develop effective regulatory strategies, preparing submissions that demonstrate a deal’s benefits and addressing any concerns. When necessary, they negotiate remedies, such as divesting certain business units to address competition concerns or implementing enhanced data protection measures.
Evolving M&As
Environmental, social, and governance (ESG) factors now play important roles in deal evaluations. Cybersecurity due diligence has also become important with digital assets representing larger portions of businesses’ values. Corporate solicitors stay current with these developments to better serve their clients.
Takeaways
Successful mergers and acquisitions often benefit from corporate solicitors. These experts identify risks, structure transactions, navigate regulations, and ensure the resulting entity can stand on solid legal ground. Experienced legal counsel is often a strategic necessity. In complex restructuring, the right expertise can determine the success of a deal.
