Taking the Fear Out of Mergers and Acquisitions: A Transaction Attorney Perspective

October 12, 2019 6:03 am.

Taking the Fear Out of Mergers and Acquisitions

At its most basic definition, a merger and acquisition (M & A) involves two or more businesses consolidating into one company. In some instances, the names of the previously individuals may not change. Depending on how well known the name is to the target market, it may not make sense to change the name and risk business. That isn’t the only decision made that seriously impacts whether a merger and acquisition takes place, let alone decisions that must be made to finalize it. Mergers and acquisitions can make business owners, as well as employees and even the public, fearful. That’s certainly understandable. The good news is that you can take the fear out of mergers and acquisitions by relying on an experienced transaction attorney who understands your business as well as your objectives. In this article, we’re going to give you some helpful information about the process and how a transaction attorney can help you through it.

Helping Employees Understand the M & A Process and How It May Affect Them

One of the biggest and most noticeable areas of fear is found in your staff. The M & A process has a bad reputation that isn’t necessarily warranted. Of course, some that have taken place haven’t exactly done much to assuage fears. When employees learn of M & A, they immediately think of layoffs, firings, replacements, and a big change in their work environment. Those fears may lead to employees quitting and leaving you in a lurch, lower productivity, and lower morale.

From the perspective of a transaction attorney, one of the best things you can do as a business is to say what you mean and mean what you say. Don’t make promises that you’re not sure can be fulfilled. Depending on the situation, it may be wise for you to wait to announce the merger and acquisition until you have a better idea of what your employees can expect.

Consider the (Not-So) Obvious: Potential Issues with Integration

Bringing everything together means that there are skills gaps and technical issues that must be addressed. With an M & A, two or more businesses are coming together. That includes financials and billing. It also includes compliance matters. The idea of completing an M & A may be exciting, but it’s important to temper that excitement with realism.

If you don’t have experience with M & A, integration of departments and technology on top of considering and managing compliance concerns. This isn’t just a decision-heavy part of the process. It can also be expensive, particularly if there are issues that weren’t known or considered.

An experienced transaction attorney is an invaluable asset when it comes to both dealing with the present realities of integration and compliance matters. Drawing on experience, the right attorney may be able to assist your business first by reviewing how the involved companies operate and help you understand the potential risks as well as where time, attention, and funds may be needed to more efficiently complete the entire process. It may also save your business time and resources when it comes to researching and reviewing compliance matters.

Related: Do You Really Need a Lawyer to Sell a Business?

M & A Agreements

Mergers and acquisitions take place for a variety of reasons. The parties may think the M & A just makes sense since they’re able to better address market needs. One of the parties may have valuable offerings, but they may have financial issues that make it next to impossible for them to remain in business. These agreements can be complex. Without the right training and experience, they can be difficult to fully understand not just the language, but also how executing the agreement may affect your business. Proper understanding of the M & A agreement, the responsibilities of each party, and how each party is affected is absolutely crucial.

A transaction attorney can help take the fear out of M & A agreements by reviewing it on behalf of your business and explaining the responsibilities of each party as well as how it may affect your business throughout the process as well as when the process ends. This feedback can help you make better decisions.

A Transaction Attorney Can Help You Better Understand Financial Obligations

Here at Larsen Law, we don’t look at things considered “what about-isms” from the perspective of wanting to scare anyone. We look at those things from the perspective of “if this could happen, what could be done now to mitigate?” Mergers and acquisitions involve money. It involves money in several areas. There may be initial expenses, rebranding expenses, technology integration expenses, and a host of expenses that may or may not be required depending on the actual agreement. For example, if one of the parties is a business that carries a lot of debt or has a lack of capital, will you or another involved party be required to pay off the debt, refinance the debt, or invest in capital? Is your business or another party allowed to choose whether you want to partake in one of those actions or do something else entirely? State and federal taxes may also be a concern.

Not understanding your actual or potential financial obligations can be scary. A transaction attorney can help you better understand the actual and potential financial obligations of your business because of the M & A. This may involve the attorney fully reviewing the merger and acquisition agreement. It may involve a review of the financial documents provided by each party. It may also involve relying on the attorney’s previous experience and understanding what situations may occur. Having a true grasp on the financial obligations involved can help you fear the entire process less.

Poor Communication Between the Parties

Poor communication and even miscommunication between the parties can cause issues that may either delay the M & A or bring it to a full stop. There are a lot of factors that can affect communication between the parties. It’s not always that one party is trying to derail the potential agreement. Yet, not knowing what’s going on and not hearing anything can create fear. This is especially true when you don’t necessarily have all of the time you’d like to devote to trying to resolve the lack of communication. You have a business to run.

A transaction attorney can help by focusing on keeping in contact with each party. You don’t have to worry about why you’re not getting answers. You have a partner on your side that you know will keep you updated.

Denver, Colorado Transaction Attorney

Larsen Law Offices, LLC is located in Denver, Colorado. We provide services as a transaction attorney for businesses. Some of our services include contract drafting, contract review, and negotiations. With more than 30 years of experience, Larsen Law wants to help your business create the best possible win-win agreements. To learn more about our services or to book your consultation, call us today at 303-520-6030!