Merger and Acquisition Contract: Everything You Need to Know

A merger and acquisition contract is the paperwork that outlines and governs the merger of two companies.3 min read

Mergers and Acquisitions

When a merger takes place, two things happen. First, the two companies combine their assets and liabilities. Second, it can impact everyone involved with the companies from shareholders and managers to employees and customers. Making the decision to merge may or may not be the right move for your business. Deciding which way to go depends on many factors, such as whether the company's core values remain and should be supported and whether the merger is a strategic fit.

When the acquisition agreement is created, it consists of several documents that are necessary to finalize the transfer of the business, including the purchase agreement. If your company is acquiring another business, it's important to have an attorney draft a comprehensive and legally binding document to protect your interests.

Negotiating an Acquisition

There are several things to consider when negotiating an acquisition since merging or purchasing another company is a complicated business that requires the experience of a business attorney. If you choose not to hire an attorney for the entire acquisition process, at the very minimum, hire an attorney to review any documents that you draft. An attorney takes care of the process from start to finish by negotiating the terms of the deal, drafting all legal documents, which includes the purchase agreement, and finalizing the deal.

Making contact with the owner of the business you're considering buying is the first step when pursuing a merger. After making contact, you'll know whether the owner is interested in selling. There are several ways a buyer can approach a potential business targeted or acquisition. These include reaching out to the owner and requesting a meeting to discuss opportunities.

A joint venture is another option where the potential buyer enters into an agreement with the owner to have a closer look at the business before purchasing. A potential buyer can also use a third-party to contact business owners to find out if they are interested in selling.

When a company is interested in selling the business, having a non-disclosure agreement (NDA) is recommended. An NDA establishes the parameters for confidentiality, allowing a potential seller to turn over business documents to a buyer knowing the buyer would be required to keep them confidential.