Merger and Acquisition
What is an M&A?
A merger and acquisition (M&A) is a broad term used to describe the consolidation, amalgamation, and purchasing of one company by another. This can happen through many different mechanisms, such as mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions.
“Mergers” and “Acquisitions” mean different things, though they are often used interchangeably. An acquisition is when one company takes over another, maintaining their own leadership team as the new owner. The acquired company no longer exists and is absorbed into the acquiring company. A merger, on the other hand, is when two companies of approximately the same size, value, or potential, join together willing, merging their companies and leadership teams into a new entity. This is often called a “merger of equals”.
What is the Role of an M&A Lawyer?
An M&A lawyer wears many hats in the process of working through a merger or acquisition, and often in an M&A law firm, these roles will be filled by lawyers who are dedicated to these specific areas of expertise, rather than be M&A generalists. M&As are complex, and there is a lot of specialized, meticulous work that needs to be done over the course of many months or years to make sure that the M&A is executed properly in a way that is beneficial to all involved. Some of these specialized roles are listed below:
M&A lawyers, from the very beginning of the process, are working in an advisory role. They dive into research of both of the interested parties–the acquirer and the target company–and they determine what all of the financials look like for both companies, identifying assets and liabilities. In this situation, they are looking from a very high-level view, looking for glaring problems, red flags, and obvious problems that will put a hold on the M&A in the very early stages. These advisers work with the other lawyers and executives to keep them apprised of the process and watch for trouble.
While lawyers are an essential role in an M&A transaction, they are one small piece among many, and it is the mediator’s job to make sure that all of the interested stakeholders and executives are communicating effectively and getting the jobs done in an efficient manner. Accountants, bankers, real estate brokers, and many other people are going to be doing a deep dive into the data to make sure that this merger or acquisition is the right step for all people involved, and to be able for them to effectively do their jobs, lawyers known as mediators are needed to rein in all of these people and manage them, keeping all of their information protected and shared, and organizing the chaos of so many separate actors.
Don’t let the title of the job fool you: a negotiator isn’t arguing your case in front of a court, pounding the table to intimidate and squeeze the last penny out of the situation. The truth is that negotiators are necessary at all levels of the process, meeting with both sides, meeting with all the subordinate groups–the people we talked about being mediated–and sitting down with the opposing negotiator to come to an agreement that will, hopefully, be mutually beneficial to all involved. Negotiators hammer out details such as terms, timelines, goals, and more. Most negotiation takes place early in the process, but negotiators are brought in throughout to smooth things out and come to a resolution that all sides can be comfortable with.
There is a lot of paperwork that goes into a merger and acquisition, and much of that will be done by a team of drafters. This will include term sheets, contracts, opinions, letters, registrations, government applications, and other important documents. There is never just one drafter, but a whole team working round the clock to hammer out all the many minutiae of the deal