Mergers and Acquisitions (M&A) are two words which are commonly used between two or more private companies. What is private company M&A, and how is it related to the success of two or more businesses? To begin with, these terms are commonly used when two or more companies join as one and form one huge enterprise.
When mergers and acquisitions usually take place, legal documentations and agreements need to take place, while the business owners must also take into consideration the pros and cons of this joint venture. There are some businesses that wish to pursue this strategy, while some others consider standing on their own after reviewing the documents and after seeing the different things that they can expect after the merger or acquisition.
Private Company M&A (Mergers and Acquisitions) Defined:
Mergers and acquisitions seem like to similar terms, but understanding what they really are and knowing their differences will make it easier for private companies to have an in-depth understanding on what these terms are, for the better of everybody else.
Merger – When two companies of the same size, decide to function and have others see themselves as one, rather than two different entities, it is called as a merger. Mergers, generally, must have two companies of equal size, where shares will be combined and will be declared as one. However, this is not the case.
Majority of the private company M&A cases involve one larger company buying a smaller company, with a specific value of shares and with a set agreement.
Acquisition – Acquisition on the other hand, is when the company has been purchased, but the owner did not agree or was left with no choice. There are certain situations where the entire process of selling the company and buying the smaller business did not end up in a friendly manner.
This is what an acquisition is all about. Why would the company agree to selling their business, even if they are against it? There are legal and certain situations where these things have to happen, which is where a corporate lawyer must enter the scene and discuss sensitive things to their client.
Private Company M&A might sound really complicated at first glance. If you’re considering doing these strategies, it is highly recommended that you consult your corporate lawyer. Seeking legal assistance will give you an idea on what you’re about to get with mergers and acquisitions, and have all the advantages as well as disadvantages laid out to you, before signing that document that legalizes everything.
Additionally, legal assistance will not just explain the process, but it will also give you an idea on what your legal rights are, and what’s your stand while the process is on-going.
There are different things to be taken into consideration when private company M&A is being talked about. Yes, everything seems complicated, while some others might get confused and not comfortable with the entire process, but if you’re being faced with these situations, it is best that you continuously work with your business attorney, and ask all the questions that you need to know before making these kinds of decisions.