Mergers and acquisitions are complex processes that can significantly influence the growth and success of businesses in Austin. For entrepreneurs and business owners aiming to expand their operations and consolidate resources, the guidance and focused knowledge of a seasoned corporate lawyer are invaluable to guide you through the lengthy and complicated process to achieve a successful outcome.
The attorneys at Quadros, Migl & Crosby handle a broad range of strategic business transactions, including the purchase of or merger with other companies, to achieve specific benefits. With over 60 years of combined experience, we strive to achieve outstanding results and provide goal-oriented, cost-effective, and practical legal solutions for your unique situation.
Mergers & Acquisitions Overview
A merger and acquisition are both strategies used by businesses to achieve growth, expansion, or consolidation, but they involve different methods of combining companies. A merger involves one corporation being absorbed by another, with the surviving corporation assuming all the assets and liabilities of both companies. In Texas, acquisitions are generally referred to as conversions and are used to gain possession, whether directly or indirectly, through various transactions, such as a sale, trade, exchange, or other business transaction.
The following are key differences between a merger and an acquisition:
Formation of a New Entity
The fundamental difference between a merger and an acquisition lies in the formation of a new entity. A merger creates a new company that combines the assets and operations of the merging entities, while an acquisition involves one company taking over ownership of another.
Continuity of Entities
In a merger, the original companies cease to exist independently and become part of the newly formed entity. Conversely, in an acquisition, the target company may retain its identity and operate as a separate entity or be integrated into the acquiring company’s structure.
During a merger, the shareholders of the merging companies become shareholders in the newly formed entity based on agreed-upon terms. In an acquisition, the acquiring company may purchase the shares of the target company’s shareholders, potentially resulting in a change of ownership.
Control and Management
In a merger, both companies contribute to the management and control of the newly formed entity. In contrast, in an acquisition, the acquiring company assumes control of the target company and its operations.
Mergers typically involve more complex legal and regulatory processes because a new entity is created. On the other hand, acquisitions may have fewer legal complexities, depending on the degree of ownership acquired and the structure of the deal.
Both strategies serve as a means for companies to achieve their growth objectives, expand their market presence and enhance their competitive position in the industry. Speak with the lawyers at Quadros, Migl & Crosby to understand your best legal options.
Key Considerations When Acquiring or Merging With Another Company
At Quadros, Migl & Crosby, we thoroughly investigate the target company when pursuing a merger or acquisition to uncover potential issues that could impact a successful transaction. Our attorneys work with you to obtain and analyze all relevant information and provide findings and recommendations before proceeding with the merger or acquisition. This step ensures you are making informed decisions at every step of the process and mitigating risk prior to going through with your intended merger or acquisition.
Some additional considerations are:
Culture & strategy: Ensure that merging companies have similar values and goals in order to make the most of their combined human capital.
Intellectual property: Be aware of the target company’s patents and intellectual property and their measures to safeguard their intellectual property and trade secrets. It may help avoid potential patent infringement issues when merging with or acquiring the company.
Customers: Understand the target company’s client base to identify any potential issues with client retention following the merger or acquisition. Developing a client retention plan before the merger or acquisition is recommended to minimize any negative impact on the combined entity’s operations and market share.
Litigation: You inherit its assets and legal obligations when you merge or acquire another company, including any pending litigation, such as lawsuits filed by external parties or employees, and the terms of any settlements.
Judgments or liens: Seeking legal advice will help you understand the potential impact of the combined entity and develop a plan to mitigate any associated risks.
Property: Consider what property the other company has, including leases or deeds you may inherit and whether you have your workforce in one or multiple locations.
By working closely with us, we will ensure your interests and objectives are protected. No matter the size or scope of your business needs, we help navigate the complex world of corporate law with confidence.
Contact the Mergers & Acquisitions Lawyers at Quadros, Migl & Crosby
Whether you are a start-up or a large corporation, businesses can achieve various objectives by working with experienced corporate attorneys at Quadros, Migl & Crosby. As the corporate landscape evolves, mergers and acquisitions will remain key tools for companies to stay competitive and adapt to changing market conditions. We will ensure you navigate the legal complexities with confidence, protecting your interests every step of the way.
Speak with one of our Austin corporate lawyers for a consultation at (713) 300-9662 or fill out a contact form today.