Mergers and acquisitions (M&A) are major events for the businesses involved, as well as their stakeholders. These often complex business deals can be very difficult to navigate, especially without support from a knowledgeable and experienced attorney.
Corporate law for mergers and acquisitions includes both federal- and state-level considerations. Recognizing which laws and regulations apply to a specific merger or acquisition is crucial for reaching a successful conclusion.
Mergers and acquisitions law firms can offer support in understanding the relevance of specific laws for an M&A deal. Attorneys can also play key roles in completing due diligence, preparing contracts and deal closing.
The right legal team can prove to be a valuable resource throughout this process. Legal support is often needed by both companies, whether the process is a merger or acquisition.
In this article, Best Lawyers will review important facts about mergers and acquisitions in general. Then, the focus will shift to specific considerations related to mergers and acquisitions law in Texas.
Understanding Mergers and Acquisitions
Mergers and acquisitions involve two or more previously separate organizations forming a single entity. A business may be absorbed by another existing enterprise. Or, businesses can come together to create a new legal entity.
The specific intent of mergers and acquisitions varies. However, the acquiring company’s goal is to gain a specific business advantage or set of them. In a merger, both organizations want to access business benefits from bringing their resources and infrastructure together.
Such deals may target potential economies of scale, aiming to reduce costs and increase output. One business may want to tap into the intellectual property or specialized equipment owned by another. Reducing competition or expanding a customer base may also be the reason behind a proposed merger or acquisition.
M&A transactions include two distinct processes that often lead to similar end results.
A merger is a true combination of two or more companies, desired by and advocated for by all organizations involved. It results in a single legal entity that generally includes leadership, staff and assets from both companies.
An acquisition can be, but isn’t always, more adversarial. One business may choose to purchase another with support from the company to be acquired. However, it’s also common for an acquiring company to gain control of another business without support from that entity.
Important Considerations for Mergers and Acquisitions Law in Texas
Texas-based law firm Massingil explained that the Lone Star State has a relatively favorable business climate overall. That can make the merger or acquisition process somewhat easier than in other states. However, that doesn’t mean the many legal needs related to M&A activity can be disregarded.
Along with the potential need to align with federal laws and regulations, businesses must take the requirements and rules set by the state of Texas into account.
Even in a favorable business environment, there are still processes that need to be followed. For example, the Texas Secretary of State offers forms for many, but not all, types of mergers and acquisitions that meet the state’s statutory filing requirements.
The Secretary of State recommends working with an attorney or law firm for mergers and acquisitions to draft a compliant instrument.
A successful filing for a merger or acquisition in Texas requires a variety of detailed and accurate documentation. For many business owners and leaders, the nuances of these documents and the submission process are simply beyond their areas of expertise.
This is another area where an attorney with experience in mergers and acquisitions law can provide support. Their knowledge of the system, common issues and past successes can help to efficiently guide M&A activity. Because state laws related to M&A can and do vary, it’s important to find an attorney with knowledge of the specifics of these laws in Texas.
There are more foundational needs to consider as well, such as due diligence and contract negotiations. M&A lawyers in Texas can help to protect both businesses by providing in-depth risk assessments. They can also use their legal knowledge to properly structure contracts and distribute risk equitably.
Mergers and acquisitions aren’t an everyday occurrence for individual businesses. At the same time, they represent potentially major changes for all involved stakeholders.
Completing the M&A process efficiently can save valuable time and resources, helping businesses realize the initial goals of these processes. In that context, it’s important to consider working with legal counsel experienced in mergers and acquisitions law. For businesses navigating these complex transactions, hiring a lawyer is essential to ensure compliance, mitigate risk and protect all parties involved.
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