Mergers are one of the primary ways in which businesses grow or in which new companies are formed. Mergers take two different forms: in some cases, an entirely new corporate entity is formed and in other cases, one company is subsumed into another. The goal of every merger is to improve business operations and to allow for greater profitability.
Corporate mergers are one of the most complex business transactions that occur. It is essential for all parties to be represented by a qualified business law professional during the corporate merger process. Sepahi Law Group, APC has extensive experience with corporate mergers and we can represent you and your business throughout the entire transaction. Call today to schedule your free consultation and learn more.
What is Involved in a Corporate Merger?
Corporate mergers can occur because companies decide they want to join their business interests together or because one company decides it wants to purchase or acquire another. Ideally, all the owners of the involved businesses are on board with the merger but things do not always work this way and hostile takeovers can occur.
The steps involved in a corporate merger and the process of two companies joining can vary greatly depending upon the specific circumstances. However, in general, the steps that are involved in a corporate merger can be broadly divided into three major categories:
- Planning the merger.
- Implementing the merger.
Planning the Merger
The planning stage is typically the most complex part of the process. It involves the parties negotiating an agreement; the companies doing an analysis of the merger; and the creation of an action plan for putting the merger into place.
The planning phase of a merger may include:
- The signing of a letter of intent to kick off negotiations.
- Appointing advisors who will examine the benefits and risks of the merger and provide advice on the process.
- Outlining the timetable for the merger to occur.
- Setting the conditions of a merger, such as a share exchange ratio.
- Defining the type of transaction, such as whether an entirely new company will be formed or whether one company will be integrated into another.
The next phase involves the managers and the shareholders agreeing to a merger plan. Typically, this phase can include:
- Drafting a final agreement.
- Calling an extraordinary shareholders meeting for owners to consider the merger proposal
- Shareholders passing a resolution on the merger.
- Creditors and bondholders having an opportunity to raise opposition to the merger after the resolution.
- The antitrust authority indicating the merger is acceptable. Authorities may sometimes impose conditions on big companies merging.
The final phase in a corporate merger is implementation. This is when the companies actually merge and join together as one. The merger deed will be entered on the Company Register and shareholders will be able to trade new shares of the company created by the merger if the company is publicly traded.
Getting Help Throughout a Corporate Merger
This is just a basic outline of the corporate merger process. There are many different legal requirements and procedural steps to take at each phase of the merger process. Sepahi Law Group, APC has represented large and small companies during corporate mergers and we can put our legal knowledge to work for you. Call today to speak with a San Diego business law professional who can assist with all aspects of a merger.