The Role of Business Lawyers in Mergers and Acquisitions

Mergers and acquisitions often occur in American business practice. They involve many professionals, including lawyers, accountants and bankers.

Lawyers specializing in mergers and acquisitions have a unique role within the legal profession. They can help make mergers and acquisitions a smoother process for both parties involved in the deal.

Negotiation

A business lawyer’s role in negotiations is to ensure the terms of a merger or acquisition meet the goals of both parties. These goals might be to protect a company from legal issues, provide for a smooth transition and prevent future problems with a transaction.

Negotiations can be complex, especially when both parties seek the same outcome. The best way to avoid this is by understanding each party’s needs and working with them rather than against them.

This approach to negotiation is referred to as integrative negotiation. It involves a sidestepping commitment to specific positions, focusing on the problem, exploring interests, and achieving results based on criteria independent of personal will or bottom lines.

Documentation

Business lawyers from law firms like Underhill Law play a crucial role in documentation and acquisitions. They help companies ensure compliance with regulations and create contracts that protect their interests.

When selling a company, the lawyer helps explain and demonstrate the value of the business to a potential buyer. This involves defining the structure of the business, its files and figures, and how it has improved the lives of employees and clients.

In addition, the lawyer may also have to perform due diligence on the target company and assess its financial and intellectual property. This work is essential because the company may need access to more information about its finances and other business details from public sources.

During the acquisition process, a lawyer may have to contact state officials and file documents with agencies. This work is necessary to ensure that a deal is completed correctly.

Taxes

Mergers and acquisitions often occur when a company acquires another business. However, this is a complicated process that requires legal guidance and expertise to ensure that the deal is structured in a tax-efficient way.

A business lawyer will help companies understand the tax implications of acquiring a business and ensure that the merger is tax-efficient. They can also provide tax-focused analyses and modeling of potential deals.

There are two primary taxable transaction forms: stock-basis carryover and asset-basis carryover. A stock-basis carryover transaction involves the purchase of ownership interests in a C corporation, which gives the buyer an outside basis in the target’s stock equal to the consideration paid.

An asset-basis carryover transaction involves purchasing an entire business, which usually benefits the seller by transferring all known and unknown liabilities to the buyer. It also allows for a step-up in the basis of the assets purchased to fair market value, providing more considerable depreciation and amortization deductions.

Litigation

There are many ways that business lawyers can assist in resolving disputes and disagreements that arise during M&A transactions. Often, these cases are resolved through mediation or arbitration before a formal lawsuit is filed.

Litigation is a civil legal process that includes any number of activities before, during, and after a case goes to trial. These may consist of pre-suit negotiations, arbitrations, facilitations, and appeals.

In most litigations, the discovery phase is a formal investigation where litigators exchange information regarding witnesses and evidence that will be used in the trial. This involves providing documents, answering interrogatories, and even giving testimonies.

The trial itself is a court proceeding that can take weeks or months. During the trial, a judge or jury decides whether a plaintiff or defendant is liable for damages and what amount of money should be awarded.