Mergers and Acquisitions
Merging businesses can have a number of significant benefits, both for the business that is making the purchase and the business being sold. The buyer can expand their operations and acquire new assets; the seller receives an influx of cash which, in some cases, may be needed to alleviate financial concerns. These deals can be fraught with complications, however, so it is crucial for both businesses to do their due diligence before making a commitment.
Each business involved in the transaction has its own identity. Company owners should get to know each other before exploring a merger or acquisition to ensure that their values, corporate culture, and vision for the future are compatible. If either party has conditions that they consider a deal breaker, this should be established upfront. Understanding what is motivating one owner can also be enlightening for the other.
Understanding Each Company’s Assets
In order for the transaction to be successful, it must be financially sound. The buyer should understand every aspect of the seller’s financials, starting with a thorough review of verified financial statements from the past three years. If the business has any outstanding debts, liens, or tax obligations, it is important to discover them upfront. The business being acquired should also investigate the financial position of the business doing the acquiring; if they do not have the resources to make the purchase, the negotiation may be doomed from the start.
A business’s assets go beyond their financials and can include extensive intellectual property holdings that add value to the deal. The business being sold may own patents, trademarks, copyrighted material, or trade secrets. The acquiring company must do their due diligence to ensure that the transfer of ownership is complete, and their licenses are protected.
One of the most valuable resources a business has is its people. The seller cannot mandate that employees stay on once a business is sold; they will have to enter into a new employment agreement with the new owner. It is important to understand the reporting structure of a business and how each of its employees contribute to its operations before acquiring it. Identify key employees who are essential to the company’s success and determine what it will take to keep them there after it is sold. If employees need specialized skills or licenses, they can be difficult to replace if they choose not to stay. Conversely, the new owners may find that they are better off without certain staff members moving forward after meeting them and evaluating their performance.
Both parties must do their due diligence to ensure that the transaction is legal and complete. If there are skeletons lurking in either company’s closet, discovering them after the transaction takes place can have serious consequences. If you are exploring a merger or acquisition, having an experienced business lawyer by your side can help you protect your interests and get the most out of the deal.
Philadelphia Business Lawyers at Harty Law Group Negotiate Complex Mergers and Acquisitions
The business lawyers at Harty Law Group provide comprehensive, customized solutions for businesses that are looking to acquire or be acquired. Armed with the latest technology and years of experience, we help businesses of all sizes achieve the best possible outcome from their transaction. With offices conveniently located in Philadelphia and Haddonfield, we represent business owners throughout Pennsylvania and New Jersey. Call us today at 267-262-5650 or contact us online to speak to a Philadelphia business lawyer.