Understanding the Legal Elements of an M&A Deal
The decision to sell your business isn’t just a transaction; it’s also a complicated legal equation. From navigating NDAs to performing due diligence to determining the structure of a deal, a solid legal strategy is the foundation upon which a successful M&A transaction rests. At Symmetrical, we know how to help business owners navigate the legal terrain of M&A. Here are a few key legal considerations to consider when advancing toward a sale.
Non-Disclosure Agreements
Negotiating a sale with a buyer is always delicate. The risk of leaks can jeopardize the entire process, and sometimes a deal simply doesn’t make it over the finish line. An NDA can help provide peace of mind during a negotiation, ensuring that your business’ financials and intellectual property won’t spread beyond the confines of the deal room. This is an essential component of any merger and one we highly recommend.
Due Diligence
Due diligence might sound more like a financial consideration than a legal one. However, customer contracts, leases, employment agreements, and other agreements may contain provisions that are triggered by certain transactions, making a thorough legal analysis essential for many deals. In addition, depending on your type of business, it may be wise to look at your intellectual property and patents to determine how they fit into an M&A deal.
Deal Structure
The structure of a deal is one of the most important parts of any negotiation. As with due diligence, it’s also something of an underrated legal calculation. Many sales, for instance, will have complex tax implications and/or require shareholder approvals, both of which are legal questions that ought to be accounted for during the negotiation. Other legal frameworks that may be part of a transaction include representations and warranties (a way of ensuring that the information shared by both parties of the deal is accurate) and non-competes (a clause that’s frequently requested by buyers who are looking to ensure the seller doesn’t go and start a competitor).
The Importance of Early Legal Planning
At Symmetrical, we know how difficult it can be to find the right M&A transaction. That’s why it’s essential to think about the legal components of a sale early in the process — so that there are few surprises when it comes time to close the deal. To learn more about how Symmetrical can help you navigate these legal considerations, get in touch with us today. We’ll make sure you leave no stone unturned during your M&A journey.