M&A is one of the most lucrative areas of practice for law firms. It can also be a challenging area of work that presents many unique challenges.

M&A lawyers often work on high-stakes deals requiring collaboration between stakeholders and executives. In these situations, M&A lawyers need to be prepared to address issues like:

Planning

In service industries like architecture and engineering, there’s an outsized importance on team dynamics during a merger or acquisition. Employees aren’t tending machinery or driving trucks and assembling products on a production line; they work together in offices with other sentient beings. This creates problems during a merger or acquisition that must be carefully planned and meticulously executed.

The first step is establishing a strategic purpose for the merger or acquisition. Then it’s time to start the due diligence process. This includes verifying everything you can about the company in question – such as what they own and their existing contracts, including intellectual property. It’s also important to assess the company’s past financial performance, as well as its projections for the future.

Working with an M&A law firm that understands the intricacies of M&A deals is important. They should be able to answer any questions and keep you updated throughout the process. They should have the capacity to handle large M&A projects, as well as small bolt-on transactions.

The planning process is incredibly time intensive, so you must be able to commit the necessary time and energy. Depending on the size of the deal, it may take months to close. During that time, you will be working in a constant state of flux, with sudden peaks and troughs in the workflow.

Negotiation

A successful M&A deal hinges heavily on how well both sides of the bargain agree. Negotiations are often tense and volatile, with both parties fighting for the best possible outcome.

M&A lawyers must be prepared for this. They must prepare their clients for negotiations, including identifying their goals and legal interests. They must also be able to anticipate any challenges or legal objections from the other side and advise on handling them.

They will also be expected to research the acquirer and the target company, analyze financials, and identify assets, liabilities, contingent liabilities, and intellectual property. They may also need to advise on other issues, including tax implications, labor and employment, competition, and regulatory matters.

A drafting team will complete most of the paperwork into an M&A deal, from term sheets to contracts and opinions, letters, registrations, applications, and government applications. These can be quite complex and require multiple drafters to work collaboratively using an easy-to-use VDR. The drafting team will also be responsible for communication between the various parties involved in the M&A transaction to ensure everyone is on the same page and aware of any changes in the status of the negotiations.

Due Diligence

Whether you’re considering buying a home or acquiring an existing business, performing due diligence is necessary. It’s a process of researching information related to the purchase to assess the financial and legal risks involved. This can include inspecting properties, researching a company’s history and growth plan, or conducting background checks on employees.

The first due diligence step involves reviewing the target company’s records, documents, and financial statements. This includes scrutinizing accounting policies and evaluating assets, debts, tax liabilities, and cash flow projections. This helps you understand the true financial status of the business so you can establish a fair price and make accurate forecasts for future performance.

In addition to reviewing legal and financial matters, due diligence can also include an investigation of a business’s reputation, employee satisfaction, and customer relationships. This can help you identify any potential issues that could negatively impact the success of a deal or increase your risk tolerance level.

Due diligence also involves interviewing key personnel, which can help you better understand the company’s culture and operations. This can be particularly important for private companies where you may not have access to public records. Due diligence can take time, depending on the scope of the investigation and how readily the seller can provide information.

Closing

The M&A cycle involves much work, and attorneys are often pressured to complete deals within tight timelines. This can lead to burnout if not handled effectively. Successful M&A attorneys understand the varying levels of intensity that come with this type of practice and can manage the situation. They do this by adequately staffing their transactions, ensuring adequate client support when working on a tight deadline, and ensuring sufficient time for the closing process.

Regarding closing, M&A law firms must ensure that all necessary documentation is completed and all conditions are met before finalizing the deal. This includes finalizing purchase agreements, drafting and negotiating termination and indemnification provisions, ensuring that a virtual data room is configured properly to house sensitive data, and helping to resolve disputes between the parties.

In addition, M&A attorneys must work with other lawyers in the firm that specialize in areas of law relevant to a particular transaction. This can include attorneys with tax, real estate, environmental, employment, intellectual property, finance, and antitrust expertise. In cross-border or multi-jurisdictional M&A transactions, they must also engage local or foreign counsel. They must be ready to respond quickly to changes in the business climate that may impact M&A activity. For example, private equity investors will likely be more active in acquisitions when a robust credit market and stable equity markets make obtaining financing easier.

 

Share.