The term mergers and acquisitions (M&A) refers to business transactions where businesses combine (merge); one business purchases another; or one business purchases specific assets from another business. M&A transactions may also involve an individual purchasing an existing business. 

From startups, mom and pop shops, to well-established corporations, companies of all sizes engage in mergers and acquisitions.

Companies may pursue an M&A for various reasons, including opportunities to scale, wiping out the competition, or selling to a bigger company. 

Mergers happen when 2 companies seek to form a partnership and join forces for the greater good. These types of M&A transactions typically occur with companies of similar size and who operate in the same industry. When 2 companies merge, it is done on common ground and mutually agreed on before they become equal partners in the new joint venture. 

Example: In 2008, Sirius Satellite Radio joined forces with rival XM Satellite Radio to create Sirius XM. Since these two companies were alone in the satellite radio world, merging allowed them to limit competition, and both reap the market benefits. 

Acquisitions often occur among competing companies in the same or similar industries. The larger of the 2 companies may buy the smaller company and integrate operations, reducing competition while simultaneously growing; or vice versa. 

An individual interested in seeking to go into business for themselves may also acquire an existing company instead of creating their own.

Example: In 2016, Microsoft acquired LinkedIn for $26.2 billion after competing with Salesforce.com to close the deal. Acquiring LinkedIn allowed Microsoft to reach a much larger user base on one of the world’s most successful social networks. 

Both processes are virtually the same, but the strategies used and the relationships between the companies can differ depending on a merger vs. an acquisition. 

The first step is for the buyer to create a Letter of Intent. Although many templates are available online, it’s best to have an experienced attorney draft your Letter of Intent because the terms laid out in this document will inform the entire M&A process. It defines the purchase price, timeline, and other key aspects of your M&A transaction. A Nondisclosure Agreement is also a standard part of initiating a business purchase.

Before creating a Letter of Intent, it’s important to know what you’re actually trying to buy. Do you need to buy the entire business, or should you simply purchase specific assets? Can you take advantage of a tax free merger, or put minimal money down through an earnout agreement?

Not only is this vital information for any transaction, but it also has important tax considerations that often go overlooked. With our focus on tax law and extensive experience in this area, you can rest assured that your deal won’t result in a surprise tax bill.

Once a Letter of Intent and Nondisclosure Agreement are signed, you enter the due diligence phase. During M&A due diligence, the buyer gathers key information about the business, including financial records, projections, existing contracts, and anything else that could make or break the deal. Essentially, due diligence ensures that you know what you’re getting into when buying a business.

Whether you’re buying or selling a business, you need a strong negotiator on your side with a robust knowledge of corporate law, contract law, and tax law to maximize your M&A benefits.

Experience is crucial here—our seasoned Chicago M&A attorneys know what to look out for!

As the saying goes, “Rome wasn’t built in a day.” Anyone who has ever been a part of a merger or acquisition knows this to be true. 

The time frame can vary depending on the deal’s complexity, ranging from 6 months to several years before a merger or acquisition is closed. Because the timeline is so long, unexpected obstacles can often occur—for example, what if a key employee leaves or an unforeseen circumstance like COVID-19 changes the business’s profitability?

Most mergers and acquisitions may include a draft of the potential timeline, but it is highly recommended to leave room for any unforeseen circumstances that may come up.

Next, it’s time to negotiate a binding agreement between both parties. Whether you’re entering a business purchase agreement, asset purchase, stock swap, or merger, our attorneys will help you create a binding legal document and seal the deal. We’ll work with you to negotiate key terms and ensure this deal achieves your specific goals.

Our role as M&A lawyers is to assist you from start to finish. Our job is to have those uncomfortable conversations and ensure all the deal terms are agreed upon. We highly recommend consulting with an attorney before beginning the M&A process!

Our mergers and acquisitions lawyers in Chicago are ready to ensure your business deal closes on the best terms for you. Let our experienced team of attorneys provide you with the knowledge to maximize your profits every step of the way. Ready to get started? Contact our experienced M&A lawyers today.

We’ve closed mergers and acquisitions deals in many industries, including:

• Cryptocurrency and Blockchain
• Ecommerce
• SaaS and Technology
• Esports
• Retail and Manufacturing
• Education

Each one has special considerations, from intellectual property to cross-border transactions to industry-specific regulations. We ensure that none of this is overlooked and your M&A transaction achieves the desired goals.